Q1 revenue and profit increased, but profit progress lagged revenue against the full-year forecast

FY2027-Q1 revenue was ¥36,611 million, operating income was ¥3,401 million, ordinary income was ¥3,697 million, and net income attributable to owners of the parent was ¥2,330 million. Compared with the same period of the previous year, revenue increased 23.8%, operating income 116.9%, ordinary income 123.4%, and net income 108.8%, indicating that margins improved alongside revenue growth. In the construction works segment, increases in nuclear power generation equipment projects and environmental protection equipment projects were cited as the main drivers of higher revenue. In the repair and maintenance works segment, the increase was primarily attributable to nuclear power generation equipment projects.

Compared with the full-year forecasts, revenue progress was 22.9% (¥36,611 million ÷ ¥160,000 million), operating income progress was 19.5% (¥3,401 million ÷ ¥17,400 million), and net income progress was 19.4% (¥2,330 million ÷ ¥12,000 million). Compared with the 25% elapsed portion of the fiscal year represented by Q1, revenue was broadly in line, while operating income and net income were slightly lower. The full-year operating margin is forecast at 10.9%, compared with approximately 9.3% in Q1, implying that profitability on future projects and the seasonality of profit recognition will be important.

FY2026 full-year operating margin was 10.5% (¥14,839 million ÷ ¥141,657 million), so the Q1 margin was approximately 1.2 percentage points below the previous full-year result. Meanwhile, compared with the previous year's revenue of ¥29,572 million and operating income of ¥1,567 million, the Q1 operating margin rose by approximately 4.0 percentage points, from approximately 5.3% to approximately 9.3%. Accordingly, the direction of profit recovery is clear at this stage, but reaching the full-year target of 10.9% will require the recognition of revenue from high-margin projects or further improvement in project profitability from FY2027-H1 onward.

In FY2027-H1, we will monitor not only cumulative progress in revenue and operating income, but also whether the full-year forecasts are revised. In particular, it will be important to see whether operating income progress catches up with the 22.9% revenue progress rate and whether the Q1 operating margin of approximately 9.3% can be maintained. The earnings release sets the annual dividend forecast at ¥75, an increase of ¥5 from the previous year's ¥70, so any further revision to the dividend policy, together with the earnings forecasts, will also warrant attention.