Operating margin fell sharply in the first quarter, making the extent of the recovery in the first half the top priority for review

Consolidated revenue in the first quarter of the fiscal year ending March 2027 was ¥3,819 million, up just 0.3% from ¥3,806 million in the prior-year quarter. Operating profit was ¥81 million, down 56.8% from ¥189 million, ordinary profit was ¥98 million, down 49.3%, and net income attributable to owners of the parent was ¥43 million, down 66.1%. Operating margin was approximately 2.1%, down approximately 2.8 percentage points from approximately 5.0% in the prior-year quarter.

Year on year, the increase in revenue was only approximately ¥13 million, whereas the decline in operating profit was approximately ¥108 million. In the prior-year first half, revenue was ¥7,948 million, operating profit was ¥711 million, and operating margin was approximately 8.9%. Standalone second-quarter revenue and operating profit in the prior year were ¥3,706 million and ¥526 million, respectively. The extent to which the next standalone second-quarter results exceed or fall short of these levels will be a benchmark for assessing the recovery in first-half profit.

The company explained that collaboration projects, admission-fee revisions, food and beverage menu changes, and new store openings in the bathing facilities business contributed to higher revenue and profit. Meanwhile, in the agency operations and e-commerce businesses, the profit contribution from large projects concentrated in the prior-year quarter had run its course, and shareholder-related expenses associated with the resumption of dividends also increased. However, revenue and profit contributions by factor have not been disclosed, so it is not possible to determine how many millions of yen of the ¥81 million in operating profit came from increased profit in the bathing facilities business, or how many millions resulted from the reversal of the agency and e-commerce businesses' project contribution and higher expenses.

At the next earnings announcement, the first point to confirm will be whether first-half operating profit can recover to ¥711 million and operating margin to 8.9%, the prior-year first-half levels. If not, it will be necessary to determine whether standalone second-quarter operating profit falls below ¥526 million, or whether it improves from the first quarter but remains insufficient on a cumulative first-half basis. Whether the impact of the large-project reversal, dividend resumption-related expenses, energy and raw-material costs, and personnel expenses will be presented in millions of yen will also be important in assessing the sustainability of profit.