Q1 is broadly on track with the full-year plan, but the scope for profit growth in H2 is the focus

Revenue in Q1 of FY2027 was ¥102,629 million, up 23.8% year on year, while operating profit was ¥6,992 million, up 130.8%. The full-year forecasts are revenue of ¥440,000 million and operating profit of ¥28,500 million, implying progress rates of 23.3% for revenue and 24.5% for operating profit on a simple pro rata basis. For a first quarter, operating profit was progressing slightly ahead of revenue, suggesting that the company has made a broadly on-plan start.

By comparison, revenue in FY2026 was ¥396,030 million and operating profit was ¥28,029 million. The FY2027 forecast calls for revenue to increase 11.1% year on year, while operating profit is expected to rise only 1.7%. Ordinary profit is forecast at ¥26,500 million, down 3.2%, and net profit attributable to owners of the parent at ¥20,500 million, down 14.8%. Accordingly, the key to the full-year plan is less the expansion of revenue itself than the extent to which higher revenue can be converted into operating profit, and whether the profit level of the core business can be maintained excluding non-operating and extraordinary gains and losses.

Q1 segment profit was ¥1,745 million in civil engineering, ¥4,332 million in building construction and ¥1,011 million in environmental and urban development, with domestic construction and the new segment contributing to the increase in profit. The international business, by contrast, posted a loss of ¥401 million, widening from a loss of ¥95 million in the same quarter of the previous year. Revenue was ¥30,259 million in domestic civil engineering, ¥54,953 million in domestic building construction, ¥9,159 million internationally and ¥9,124 million in environmental and urban development. However, the reporting segment classifications and profit calculation methods have changed, and the prior-year figures have been restated on the revised basis.

The Q1 disclosure did not provide figures for operating margin, cash flow from operating activities or order backlog. To determine whether the increase in operating profit reflects improved project profitability or is temporary, driven by the timing of completed construction revenue recognition or real estate sales, the interim disclosure of cumulative operating profit, gross profit margin on completed construction projects, segment profit and order backlog will be important. In FY2027-H1, ¥14,250 million, half of the full-year operating profit forecast, will be one benchmark, while the focus will also be on whether the plan is weighted toward profit in H2 or whether profit is already accumulating in H1.