Construction offsets lower profits in retail and trading; FY2027-H1 will test the sustainability of the earnings mix

Consolidated revenue in FY2027-Q1 was ¥32,524 million, up 0.3% year on year, while operating profit was ¥631 million, down 7.5%, ordinary profit was ¥706 million, down 13.1%, and net profit attributable to owners of the parent was ¥472 million, down 26.8%. Revenue was maintained, but profit did not keep pace, with operating profit down ¥52 million from ¥683 million in the same period of the previous year.

By segment, retail revenue was ¥19,182 million, down 3.5% year on year, and segment profit was ¥446 million, down 26.3%. Construction revenue rose 15.3% to ¥11,527 million, while segment profit surged 317.4% to ¥361 million. Trading revenue rose 1.1% to ¥1,579 million, but profit fell 53.9% to ¥57 million. Profit from Other businesses also fell 68.1% to ¥31 million. Construction is supporting the group as a whole, but earnings are not becoming more diversified.

In FY2026 as a whole, construction revenue rose 11.5% to ¥49,902 million and segment profit increased 22.7% to ¥2,207 million. Retail revenue fell 2.8% to ¥77,034 million and profit fell 11.3% to ¥1,563 million, while trading revenue fell 17.0% to ¥6,502 million and profit fell 22.3% to ¥666 million. The company has provided qualitative explanations involving store renovations, weather, construction progress and product mix, but has not disclosed the monetary contribution of each factor or the breakdown of profit margins.

In the next earnings release, it will be important to see whether consolidated operating profit returns to year-on-year growth even if construction’s high profit growth rate normalizes. At the same time, the impact of retail renovations should begin to fade, so the narrowing of the decline in retail segment profit and the recovery of trading profit after the active pharmaceutical ingredient issue should be assessed. If profit growth depends solely on construction, the likelihood of achieving the full-year operating profit forecast of ¥3.8 billion may be high, but earnings sustainability will still require a cautious assessment.