Q1 margin contracted despite higher unit prices, making utilization recovery the focus for FY2027-H1

First-quarter revenue was ¥1,573.922 million, up 2.1% year on year, while operating profit was ¥130.432 million, down 11.7%, ordinary profit was ¥137.363 million, down 7.0%, and net income was ¥93.005 million, down 8.3%. Based on prior-year first-quarter revenue of ¥1,541.413 million and operating profit of ¥147.653 million, the operating margin declined by approximately 1.3 percentage points, from approximately 9.6% to approximately 8.3% in the current quarter.

Regarding the cost structure, cost of sales for the fiscal year ended March 2026 was ¥4,823.037 million, an increase of ¥188 million from the prior year, while SG&A was ¥797 million, up ¥28 million. The gross margin was 22.1% and the operating margin was 9.3%, whereas the current first-quarter materials do not disclose the breakdown of cost of sales, gross profit or SG&A. The company attributes the decline in profit to continued investment in people, including enhanced training and improved employee compensation, but the investment amount and the impact by expense item cannot be confirmed.

For the first half of the fiscal year ending March 2027, the key issue will be whether utilization declines further from 89.8% in Q1 or recovers from its year-on-year decline, even if technical service fees continue to rise. Returning the operating margin to the 9.3% reported for the fiscal year ended March 2026 will require continued increases in unit prices as well as the absorption of lower utilization and higher personnel and training costs. For the six months ending September 2026, we will look for the actual amounts of cost of sales and SG&A, their year-on-year changes, and the change in the operating margin.