Q1 led on operating profit, but full-year profit growth is virtually flat

Revenue in Q1 FY2027 was ¥20,212 million, operating profit was ¥4,308 million, ordinary profit was ¥5,432 million, and net income attributable to owners of the parent was ¥3,728 million. Year on year, revenue increased 8.2%, operating profit 19.1%, and ordinary profit 13.5%, confirming improvement through the operating level, while net income declined 5.4%. On a simple calculation, progress against the full-year revenue forecast of ¥71,834 million was 28.1%, while progress against the full-year operating profit forecast of ¥6,801 million was 63.3%.

The increase in operating profit reflects not only the effect of higher revenue but also lower amortization following the impairment of intangible assets recorded in the overseas business in FY2026. The Q1 earnings presentation explained the decline in amortization as a factor behind the increase in operating profit, but did not disclose a bridge separating the amount of lower amortization from profit growth generated by higher revenue and improved productivity in existing businesses. In the H1 results, it will be necessary to distinguish the accounting uplift following the impairment from the underlying profit growth of the businesses.

The full-year forecasts are revenue of ¥71,834 million, operating profit of ¥6,801 million, ordinary profit of ¥8,731 million, and net income of ¥6,165 million. Revenue is expected to rise 11.0% from the previous fiscal year, while operating profit is expected to increase only 0.2% and ordinary profit 0.1%. The Q1 operating margin was approximately 21.3%, up from approximately 19.4% a year earlier, but the company has not indicated that this level is expected to continue for the full year. In H1, an important issue will be whether the front-loaded profit is offset by investment, hiring, and business-restructuring costs in H2.

For net income, the company explained that quarterly tax expenses related to overseas subsidiaries were a reason for the decline, but did not disclose the amount of tax expense or the difference from the normal level. Accordingly, at the next results announcement, the focus will be not only on operating profit progress but also on normalization of the tax burden, cumulative H1 net income, and the likelihood of reaching the full-year net income forecast of ¥6,165 million.