Orders increased, but FY2027-Q1 got off to a cautious start relative to the full-year profit plan

FY2027-Q1 revenue was ¥61,399 million, down 4.2% year on year; operating profit was ¥3,547 million, down 11.0%; ordinary profit was ¥3,843 million, down 7.9%; and net profit attributable to owners of the parent was ¥2,034 million, down 28.4%. While both revenue and operating profit declined, orders received increased 7.5% to ¥105,409 million, indicating a time lag between order intake and the conversion of orders into revenue and profit.

The full-year forecasts are revenue of ¥307.0 billion, operating profit of ¥23.8 billion, ordinary profit of ¥25.0 billion and net profit attributable to owners of the parent of ¥18.0 billion. Progress as of Q1 was 20.0% for revenue, 14.9% for operating profit, 15.4% for ordinary profit and 11.3% for net profit. Because projects in the construction and engineering industry are recognized unevenly across quarters, it is too early to judge performance against a simple 25% benchmark, but the fact that operating profit progress is below that of revenue and ordinary profit requires attention.

Revenue was ¥64,058 million and operating profit was ¥3,983 million in the same period of the previous year, so the operating margin declined by approximately 0.4 percentage points, from approximately 6.2% to 5.8%. Operating profit in FY2026-H1 was ¥10,470 million. To maintain that level in FY2027-H1, profit accumulated through Q2 must at least exceed the previous year's result. The results will need to show separately the timing of project completion, domestic and overseas construction volumes, and the presence or absence of low-margin projects.

Meanwhile, the order backlog stood at ¥357,276 million, up 31.5% year on year and at a high level. If the backlog converts into actual completed construction revenue, it will support second-half revenue, but the backlog amount alone does not indicate profitability or the timing of revenue recognition. In FY2027-H1, the key checks will be the portion of the backlog scheduled for recognition during the fiscal year, progress in completed construction revenue and the extent of the recovery in the operating margin, followed by a reassessment of the distance to the full-year operating profit target of ¥23.8 billion.