Will the pace of earnings growth in FY2027 1Q continue through the interim period?

In FY2027 1Q, revenue was ¥24,319 million, operating profit was ¥2,897 million, ordinary profit was ¥2,892 million, and net profit attributable to owners of the parent was ¥1,955 million. Year on year, revenue increased 9.6%, operating profit 76.5%, ordinary profit 75.7%, and net profit 75.4%, with profit growth outpacing revenue growth. Progress against the full-year forecasts was approximately 22.1% for revenue and 26.3% for operating profit, meaning operating-profit progress exceeded revenue progress by approximately 4.2 percentage points.

The company has not disclosed the first-quarter operating margin, but it was approximately 11.9% based on the reported figures. This was above the 8.5% recorded for FY2026 as a whole. However, construction-business segment profit was ¥3,545 million in the first quarter, compared with company-wide operating profit of ¥2,897 million. It will therefore be necessary to determine, including company-wide expenses and consolidation adjustments, whether the increase in segment profit flows through to company-wide operating profit.

The company attributes the increase in revenue and profit to its active response to demand for new construction, interior work and renovations for stores, as well as construction demand for lodging facilities, drawing on its expertise in commercial-facility construction and its planning and proposal capabilities. It has not disclosed the increase in profit by factor, the amount of improvement in construction profitability, or the breakdown of order prices and cost ratios. The full-year forecasts are revenue of ¥110,000 million, operating profit of ¥11,000 million, ordinary profit of ¥10,900 million, and net profit of ¥7,300 million. At the next interim results announcement, we want to assess whether margins that absorb rising material and labor costs are being maintained, in addition to whether order activity is continuing.

At the FY2026 results announcement, the company cited the expected slight flattening of cumulative construction-business revenue through 2Q as a factor in its forecasts, reflecting the four-week, eight-day-off work-style reform. Accordingly, for FY2027-H1, we will use revenue of ¥55,000 million and operating profit of ¥5,500 million as simple halfway benchmarks and assess the extent to which actual results diverge from them. If results fall short, it will be important to see how far the company breaks down and explains whether the shortfall reflects construction delays caused by employees taking days off or issues with orders and profitability.