Q1 progress is low, but the company maintains its full-year forecast, assuming earnings will be weighted toward Q3

In Q1 of FY2027, revenue was ¥5,277 million, down 1.8% year on year, operating profit was ¥91 million, down 47.4%, ordinary profit was ¥56 million, down 47.8%, and net profit attributable to owners of the parent was ¥45 million, down 91.4%. Revenue progress against the full-year forecast of ¥22,000 million was 24.0%, while progress against the ¥860 million operating profit forecast was only 10.6%, indicating that profit is building more slowly than revenue. The operating margin also fell 1.5 percentage points, from 3.2% in the same period of the previous year to 1.7%.

Meanwhile, in its earnings presentation, the company assessed Q1 as being in line with plan and explained that it incurred upfront investment costs, including expenses for changing formats at domestic restaurants, dismantling tatami seating areas at izakaya locations and expanding its factories. It also said that earnings are seasonal and weighted toward the second half, particularly Q3. To achieve the full-year forecast based on Q1 results, the company must generate ¥769 million in operating profit over the remaining three quarters. This assumes a significant contribution from Q3, including year-end demand, rather than a simple even allocation across the quarters.

By segment, revenue from the domestic restaurant business was ¥3,688 million, down 4.8% year on year, while segment profit was ¥16 million, down 87.3%. The overseas restaurant business improved to revenue of ¥477 million and a segment loss of less than ¥1 million. The prepared-food business posted revenue of ¥967 million and segment profit of ¥45 million, up 17.3% and 33.1%, respectively, while the production and distribution business posted revenue of ¥408 million and profit of ¥31 million, up 7.1% and 53.0%, respectively. The fact that profit growth in the growth businesses has not fully offset the decline in domestic restaurant profit is a key point to confirm in Q2.

At the next earnings release, the focus will be on the cumulative second-quarter operating profit progress rate, operating margin and recovery in domestic restaurant profit. In particular, it will be important to determine whether one-off costs related to format changes and factory expansion will continue into Q2, and whether profit is improving even excluding the seasonality of the Q3 weighting. The company did not prepare a quarterly statement of cash flows for Q1 and has not disclosed operating cash flow or the amount of investment spending, so it will also be important to see whether disclosure on cash generation increases alongside the build-up in profit.