Can the full-year forecast be maintained despite the sharp decline in first-quarter profit?

FY2027-Q1 revenue was ¥2,454 million, operating profit was ¥62 million, ordinary profit was ¥67 million, and quarterly net profit attributable to owners of the parent was ¥36 million. Year on year, revenue fell 8.0%, operating profit fell 70.8%, ordinary profit fell 69.3%, and net profit fell 74.1%, meaning that the decline in profit was greater than the decline in revenue. Operating profit margin was only 2.5% on a simple calculation, well below the approximately 7.9% calculated from operating profit of ¥212 million and revenue of ¥2,669 million in the same quarter of the previous year.

The company nevertheless has not revised its FY2027 full-year forecasts of revenue of ¥11,300 million, operating profit of ¥750 million, ordinary profit of ¥780 million, and net profit of ¥500 million. First-quarter progress rates were 21.7% for revenue and 8.3% for operating profit. Revenue was below the simple quarterly benchmark of 25%, or one-quarter of the full-year forecast, while profit was substantially behind that pace. To achieve the full-year forecasts, the company needs to generate an additional ¥8,846 million in revenue and ¥688 million in operating profit from the second quarter onward.

Compared with FY2026, first-quarter revenue was ¥2,669 million and operating profit was ¥212 million, while full-year revenue was ¥10,871 million and operating profit was ¥705 million. The ¥8,846 million in revenue required from FY2027-Q2 onward is approximately 7.8% above the ¥8,202 million generated during the remaining period of the previous year, while the required operating profit of ¥688 million is approximately 39.6% above the previous year's ¥493 million during the remaining period. At present, maintaining the full-year forecasts will require not only higher revenue in the second half but also a sharp recovery in margins.

At the next FY2027-H1 results, the previous year's revenue of ¥5,345 million and operating profit of ¥346 million will be important benchmarks. After deducting first-quarter results, second-quarter revenue of more than ¥2,892 million would be needed to exceed the previous year's cumulative result, while operating profit of at least ¥285 million would be needed to exceed the previous year's cumulative operating profit. We will look for additional disclosure supporting the maintenance of the full-year forecasts, including whether the decline in orders from major customers is temporary, whether the decline following the end of spot projects has run its course, and whether higher revenue in the interpreting business can lift consolidated profit.