How much of the first-half revenue and profit decline can be recovered in the second half

Revenue in the first half of FY2026 was ¥12,740 million, down 4.9% year on year, while operating profit was ¥1,546 million, down 20.6%. Ordinary profit was ¥1,675 million and interim net income attributable to owners of the parent was ¥917 million, down 16.8% and 30.7%, respectively, from the same period of the previous year. The company cited as the main factors the reaction to the previous year, when consolidated subsidiary Rifレックス won a 10-year water public-private partnership project, and delays in the progress of projects already on hand.

The full-year forecasts remain unchanged at ¥24,900 million in revenue, ¥2,410 million in operating profit, ¥2,450 million in ordinary profit and ¥1,660 million in net income attributable to owners of the parent. Progress against the full-year forecasts in the first half was 51.2% for revenue, 64.2% for operating profit and 55.2% for net income. Looking at profit alone, more than half of the annual plan had been achieved in the first half. However, the plan also assumes lower revenue and profit in the second half, so it is too early to take comfort from the high progress rates alone.

Subtracting first-half results from the full-year forecasts leaves ¥12,160 million of revenue, ¥864 million of operating profit, ¥775 million of ordinary profit and ¥743 million of net income required in the second half. The forecast full-year operating margin is approximately 9.7%, compared with 12.1% in the first half, meaning that the company’s plan assumes a decline in profitability in the second half. The company, whose main customers are government agencies, has a seasonal concentration of revenue in the first half, but in FY2026-Q3 it will be necessary to distinguish between ordinary seasonality and prolonged delays in project progress.

In the next results release, revenue, operating profit and operating margin for the standalone third quarter should be reviewed in addition to the nine-month cumulative figures. In the FY2026 first-half results presentation, the company said that standalone second-quarter orders exceeded the year-earlier level, but did not disclose standalone financial figures for the quarter. It will be important to determine whether the recovery in orders led to revenue recognition and a profit recovery, and whether progress on the remaining projects supporting the full-year forecasts will be presented.