First-quarter operating profit growth outpaced revenue growth; profit sustainability is the focus for FY2027-H1

Consolidated revenue for the first quarter of the fiscal year ending March 2027 was ¥480,116 million, up just 0.4% year on year, while operating profit was ¥39,384 million, up 15.5%, and ordinary profit was ¥39,812 million, up 13.4%. Operating profit growth substantially outpaced revenue growth, making the key question whether margin improvement from price revisions and the accumulation of rental income from the managed-property base will continue in FY2027-H1.

Net profit attributable to owners of the parent was ¥23,678 million, down 1.8% year on year. The company recorded a ¥4,248 million impairment loss on investment securities related to shares in JustCo Holdings Pte. Ltd. as a special loss, preventing the improvement in operating profit from flowing through to bottom-line profit. In the first-half results, it will be necessary to check whether a large special loss of this type will recur, whether investments will be revalued, and the breakdown of special gains and losses.

By segment, construction revenue was ¥119,846 million, down 5.3% year on year, while operating profit was ¥9,896 million, up 16.9%. Real estate leasing revenue was ¥307,941 million, up 3.9%, and operating profit was ¥27,510 million, up 15.7%. Real estate development revenue was ¥29,990 million, down 10.6%, but operating profit was ¥4,221 million, up 52.3%. Financial business operating profit was also ¥636 million, exceeding the ¥610 million recorded in the prior-year quarter.

In other words, first-quarter profit growth was stronger than revenue growth overall. Construction and real estate development delivered lower revenue but higher profit, while real estate leasing delivered both revenue and profit growth. Full-year FY2026 operating profit was ¥135,256 million and the operating margin was 6.8%. In the first half, it will be necessary to examine not only the operating profit growth rate but also construction profitability, occupancy rates in real estate leasing, and the mix of properties sold in real estate development. In particular, it is important to distinguish between an improvement in net profit caused merely by the reversal of the impairment loss and continued profit growth in the core business.