Profit growth is slowing relative to revenue growth, making FY2026-Q3 a period for assessing the sustainability of profitability

In FY2026-H1, consolidated revenue was ¥23,470 million, operating profit was ¥5,337 million, ordinary profit was ¥4,494 million, and interim net profit attributable to owners of the parent was ¥3,245 million. Year on year, revenue increased 37.4%, operating profit 9.9%, ordinary profit 3.6% and net profit 8.3%, making profit growth clearly smaller than top-line growth. In particular, the operating margin declined by approximately 5.7 percentage points, from about 28.4% in the same period of the previous year to approximately 22.7% in the current interim period.

The decline in margins indicates that profit growth is unlikely to accelerate through revenue scale expansion alone. In FY2026-Q1, operating profit was ¥3,691 million on revenue of ¥11,749 million, producing an operating margin of approximately 31.4%, but the margin fell to 22.7% on a cumulative first-half basis. However, because the company has not disclosed standalone consolidated results for the three months of Q2, it is not currently possible to determine whether the main factor was the reversal of highly profitable Q1 projects or an increase in cost burdens from Q2 onward. In FY2026-Q3, the focus will be on standalone quarterly revenue and operating profit, as well as, where available, project-level gross margins and the breakdown of selling, general and administrative expenses.

By segment, revenue from the real estate investment and development business was ¥20,115 million and segment profit was ¥5,100 million, up 44.9% and 15.1%, respectively, year on year. The real estate management business also reported revenue of ¥2,812 million and segment profit of ¥1,426 million, representing increases of 14.5% and 14.1%, respectively. Meanwhile, the real estate consulting business reported revenue of ¥543 million and segment profit of ¥168 million, down 27.0% and 12.8%, respectively. The focus will be on how far the profit growth in investment and development and management, which supports consolidated earnings growth, can offset the decline in consulting and the burden of investment in human capital.

The company forecasts operating profit of ¥8,400 million, ordinary profit of ¥7,200 million and net profit of ¥5,000 million. At the end of H1, progress stood at approximately 63.5% for operating profit, 62.4% for ordinary profit and 64.9% for net profit. Assuming simple 75% progress by 9M, operating profit of ¥6,300 million, ordinary profit of ¥5,400 million and net profit of ¥3,750 million would provide reference thresholds. However, because results fluctuate according to the timing of real estate deliveries, these thresholds should not be treated as minimum requirements under the company’s plan. In Q3, it will be necessary to confirm not only whether the full-year forecasts are maintained, but also whether the margin decline is temporary or structural and whether the company still has room to sell highly profitable properties.