Q1 profit led by additional contracts for large projects despite missing the sales target

Consolidated revenue in Q1 of the fiscal year ending March 2027 was ¥5,671 million, down ¥425 million from ¥6,096 million in the same period last year and down 7.0% year on year. Operating profit, meanwhile, rose ¥309 million from ¥237 million to ¥546 million, an increase of 130.3% year on year. Revenue and operating profit moved in opposite directions, resulting in a profit structure that is difficult to explain through ordinary growth in sales volume alone.

The full-year forecasts are revenue of ¥27,000 million and operating profit of ¥1,500 million. As of Q1, simple progress was 21.0% for revenue versus 36.4% for operating profit, with operating profit ahead by 15.4 percentage points. To meet the full-year plan, the company needs to generate an additional ¥21,329 million in revenue and ¥954 million in operating profit after Q1. The operating margin calculated from the full-year forecast is approximately 5.6%, making it important to determine whether Q1's 9.6% margin was temporarily high or can be maintained to some extent beyond the first half.

The company stated that it had completed contracts for additional work on certain large construction projects that had been started ahead of contract execution, allowing the related revenue to be recognized, and identified this as a factor behind the increase in profit. For revenue, however, the company cited declines in earthquake-resistance-related construction, sluggish growth in rock bolt sales and the completion of other large construction projects as factors behind the decline. The amount of revenue and profit generated by the additional contracts, the number of contracts, project-level profitability and the amount reflected in the order backlog could not be confirmed, so there is insufficient information to conclude that the latest increase in profit represents a sustainable improvement in earnings power.

At the next update, FY2027-H1, cumulative first-half revenue and operating profit should be checked in millions of yen, along with how progress against the full-year forecasts has changed from Q1's 21.0% for revenue and 36.4% for operating profit. The key points will be whether revenue has recovered from its year-on-year decline, whether the operating margin has fallen sharply from 9.6% toward the full-year plan's approximately 5.6%, and whether the profit contribution from the additional contracts continued into Q2.