Despite expectations for higher revenue and operating profit in FY2027, ordinary profit and net income are expected to decline

FY2026 revenue was ¥85,024 million, operating profit was ¥10,762 million, ordinary profit was ¥12,535 million and net income attributable to owners of the parent was ¥11,937 million. Revenue increased 28.4% year on year, operating profit rose 21.1% and ordinary profit increased 39.2%, indicating substantial growth from the operating level through to the ordinary profit level, but net income declined 43.7% from ¥21,280 million in the previous fiscal year. The FY2027 company forecast calls for revenue of ¥86,000 million and operating profit of ¥11,000 million, representing increases of just 1.1% and 2.2%, respectively, while ordinary profit of ¥11,700 million is expected to decline 6.7% and net income of ¥9,000 million is expected to decline 24.6%.

The comparison base for the next results is FY2026-Q1, when revenue was ¥20,270 million, operating profit was ¥2,039 million, ordinary profit was ¥2,279 million and net income was ¥4,109 million. Cumulative first-half FY2026 revenue was ¥40,778 million and operating profit was ¥4,645 million, while cumulative revenue through Q3 was ¥64,733 million and operating profit was ¥8,719 million, with operating profit building from Q1 through Q3. In FY2027-Q1, it will be necessary to assess not only whether revenue and operating profit simply exceed the year-earlier figures, but also the degree of progress against the full-year forecast, both year on year and against the full-year plan.

Based on a simple calculation, the FY2027 forecast implies an operating margin of approximately 12.8%, almost unchanged from the approximately 12.7% reported for FY2026. The ordinary profit margin is expected to be approximately 13.6% and the net margin approximately 10.5%, down from approximately 14.7% and 14.0%, respectively, in FY2026. The company’s materials do not provide a specific monetary bridge in the analysis section explaining the decline in FY2026 net income, making the breakdown of non-operating income and expenses, extraordinary income and expenses, and income taxes important in FY2027-Q1.

In particular, operating profit increased in FY2026 as ナカヨ was consolidated and several businesses expanded, whereas the FY2027 profit forecasts diverge, with operating profit rising but net income declining. Even if operating profit is on plan in FY2027-Q1, ordinary profit and net income could fluctuate because of one-off items such as foreign exchange gains or losses, equity-method investment gains or losses, and gains on sales of fixed assets. In the next results, the focus will be not only on whether the full-year forecast is maintained or revised, but also on whether the company provides a verifiable bridge from operating profit to net income attributable to owners of the parent.