Will the high profitability seen in Q1 continue into H1 and the full year?

In FY2027-Q1, revenue was ¥8,280 million, up 1.6% year on year; operating profit was ¥824 million, up 134.9%; ordinary profit was ¥787 million, up 138.0%; and profit attributable to owners of the parent was ¥536 million, up 163.2%. Profit growth substantially outpaced revenue growth. The company attributed this mainly to progress on its substantial order backlog, together with improved project profitability in the civil engineering business.

The full-year forecasts are revenue of ¥33,128 million, operating profit of ¥1,660 million, ordinary profit of ¥1,480 million and net profit of ¥1,010 million. Q1 progress was approximately 25.0% for revenue, 49.6% for operating profit and 53.1% for net profit. Operating profit and net profit are well ahead of the simple elapsed-quarter ratio, so the H1 results will need to distinguish whether Q1's profit level reflects a temporary improvement in project profitability or the sustained effects of design changes, price pass-through and cost control.

Revenue and operating profit in FY2026 were ¥32,230 million and ¥1,588 million, respectively. The FY2027 company forecasts therefore imply increases of ¥898 million in revenue and ¥72 million in operating profit. The operating profit growth forecast is only 4.5%, so it is not based on extrapolating FY2027-Q1's 134.9% growth rate to the full year. At the next results announcement, the focus will be on how far H1 cumulative revenue exceeds the simple run-rate level of ¥16,564 million, half the full-year forecast, and whether operating profit exceeds ¥830 million.

FY2027-Q1 included no extraordinary gains or losses, and no impairment loss was reported. Accordingly, at least based on the disclosure, the improvement in operating profit was not driven by extraordinary income. However, standalone quarterly operating margins and operating cash flow were not disclosed. In FY2027-H1, it will be necessary to assess not only the increase in operating profit but also the gross profit margin, project cost ratio, operating cash flow and whether the full-year forecasts have been revised.