A sharp recovery in operating profit is the focus for FY2027 ending May

In FY2026 ending May, revenue rose 6.2% year on year to ¥79,549 million, while operating profit fell 80.3% to ¥159 million, ordinary profit declined 59.9% to ¥339 million, and net profit attributable to owners of the parent dropped 89.1% to ¥56 million. The operating margin also fell 0.9 percentage points, from 1.1% to 0.2%. The immediate starting point is therefore that higher revenue did not translate into a recovery in earnings.

For FY2027 ending May, the company forecasts revenue of ¥85,600 million, operating profit of ¥630 million, ordinary profit of ¥630 million and net profit of ¥400 million. Operating profit is projected to increase by ¥471 million from ¥159 million, representing growth of 295.2%. Net profit is also expected to recover from ¥56 million to ¥400 million, although the prior year included special factors such as a ¥255 million impairment loss. In Q1, it will therefore be necessary to distinguish whether improvement at the operating-profit level is leading the recovery.

The comparable FY2026-Q1 figures were revenue of ¥18,825 million, operating profit of ¥42 million, ordinary profit of ¥31 million and quarterly net profit of ¥4 million. Accordingly, the initial tests for FY2027-Q1 will be not only whether revenue increases year on year, but also whether operating profit exceeds ¥42 million and the operating margin improves on the approximately 0.2% recorded in the year-earlier quarter. We will also check whether the business has returned to a structure in which profit accumulates from Q1 toward the full-year operating profit target of ¥630 million.

The company has explained that revenue and profit tend to increase in December and the fourth quarter due to seasonality, so full-year performance should not be judged solely on Q1 figures. Even so, following the decline in the operating margin to 0.2% in FY2026 ending May, the credibility of the recovery scenario will depend on whether FY2027-Q1 simultaneously shows continued positive operating profit, an improvement in gross profit and no change to the full-year forecast.