Revenue and profit declined in Q1, but the full-year forecast remains unchanged

FY2027-Q1 revenue was ¥40,429 million, down 8.9% year on year. Operating profit was ¥1,358 million and ordinary profit was ¥1,577 million, down 20.7% and 20.5% year on year, respectively. Compared with the full-year forecasts of ¥185,000 million in revenue and ¥6,600 million in operating profit, the simple progress rates were 21.9% and 20.6%, respectively, below the 25% elapsed portion of the first quarter.

However, it is too early to assess the risk of missing the full-year targets based solely on these progress rates. In civil engineering and building construction, contractually scheduled completion and handover are concentrated in the second half, and the company has consistently disclosed seasonal fluctuations in which second-half revenue exceeds first-half revenue. Accordingly, in FY2027-H1, it will be more important to determine whether the year-on-year decline in revenue is narrowing, whether margins on completed construction are improving, and whether progress and profitability are being maintained on large projects scheduled for handover in the second half than to assess whether revenue has reached a simple 50% of the full-year forecast.

Net income was ¥1,926 million, up 49.9% year on year, but this was not due solely to improvement at the operating level. The first quarter included a gain on the sale of fixed assets of ¥840 million and a gain on the sale of investment securities of ¥494 million, which increased the difference from operating profit of ¥1,358 million. In FY2027-H1, it will be important to determine whether operating profit is continuing to improve without relying on extraordinary gains and whether the gap between ordinary profit and net income has widened again.