First-quarter profit is ahead of plan, but the full-year earnings decline remains projected

First-quarter revenue for the fiscal year ending March 2027 was ¥12,822 million and operating profit was ¥1,095 million, up 10.0% and 34.8%, respectively, from the year-ago period. Progress against the full-year forecast was 25.6% for revenue and 28.4% for operating profit, meaning that after one-quarter of the year, profit progress was 2.8 percentage points ahead of revenue progress. The operating margin also improved to approximately 8.5% from approximately 7.0% in the year-ago period, indicating that profitability contributed more than simply an increase in revenue scale.

However, the company's full-year plan for the fiscal year ending March 2027 calls for revenue of ¥50,000 million and operating profit of ¥3,850 million. Actual revenue and operating profit for the fiscal year ended March 2026 were ¥52,366 million and ¥4,769 million, respectively, so the full-year plan assumes declines of 4.5% in revenue and 19.3% in operating profit. The strong first-quarter performance makes the plan appear to have some headroom, but quarterly assumptions for annual construction progress and the timing of profit recognition have not been disclosed.

As a benchmark for the first half, half of the full-year forecast would imply revenue of ¥25,000 million and operating profit of ¥1,925 million. Revenue and operating profit in the year-ago first-half period corresponding to the fiscal year ending March 2027 were ¥24,880 million and ¥2,078 million, respectively. Accordingly, in the first-half results, it will be important to see whether revenue maintains or exceeds the year-ago level and whether operating profit exceeds the year-ago first-half result. However, the company's first-half and second-half revenue and profit allocation has not been specified in the available information because it operates in the order-based construction industry, so full-year achievement cannot be determined solely on the basis of a simple 50% benchmark.

At the next earnings announcement, the focus will be on cumulative first-half revenue and operating profit, as well as whether the full-year forecast is revised. The company did not revise its earnings forecast in the first quarter and reported strong performance supported by order intake and progress on large-scale projects, but it remains unclear how fully it can explain, in monetary terms, why it is maintaining its full-year earnings decline plan. If first-half operating profit exceeds ¥1,925 million and also surpasses the year-ago first-half figure of ¥2,078 million while the full-year forecast is left unchanged, the key issues will be whether higher second-half expenses or conservative estimates of construction profitability are indicated.