After achieving the first-year targets of Raito2027, will the company maintain its plan for a slight decline in revenue and operating profit in FY2027?

FY2026 revenue was ¥139.216 billion, operating profit was ¥17.201 billion, ordinary profit was ¥17.712 billion, and net income attributable to owners of the parent was ¥12.487 billion. Revenue and operating profit reached record highs. Raito2027's final-year targets were revenue of ¥135.0 billion, operating profit of ¥15.5 billion, and ROE of at least 12.5%. FY2026 results exceeded these targets by ¥4.216 billion, ¥1.701 billion, and 1.5 percentage points, respectively.

Nevertheless, the FY2027 company forecasts are revenue of ¥138.0 billion, operating profit of ¥16.850 billion, ordinary profit of ¥17.3 billion, and net income attributable to owners of the parent of ¥11.8 billion. Compared with the previous fiscal year, these represent declines of 0.9% in revenue, 2.0% in operating profit, 2.3% in ordinary profit, and 5.5% in net income. Since the plan reduces profit levels immediately after record highs were achieved, a key issue at the next results will be whether this reflects merely conservative assumptions or a substantive pause that incorporates construction profitability and the decline following large-scale projects.

In FY2027-Q1, revenue was ¥29.522 billion and operating profit was ¥3.329 billion. Revenue declined 3.3% year on year, while operating profit increased 19.5%. Progress against the full-year forecasts was 21.4% for revenue and 19.8% for operating profit, a difference of only about 1.6 percentage points. The company explained that the building business and its US subsidiary experienced a decline following large-scale projects in the previous fiscal year, while delays in starting some projects already in hand also weighed on revenue. At the interim period, it will be necessary to assess whether these revenue factors have been resolved.

At the next results, we will assess the levels of cumulative interim revenue and operating profit compared with ¥65.063 billion and ¥6.908 billion, respectively, in the same period of the previous year, as well as whether the full-year forecasts of ¥138.0 billion and ¥16.850 billion will be maintained. In particular, it will be important to determine whether the company's explanation that orders in specialist civil engineering and building remain strong is translating into actual revenue recognition, whether the decline following large-scale US projects has run its course, and whether further improvement in construction profitability is assumed for the second half.