Plan to restore operating profit in FY2027 despite lower revenue

In FY2026, revenue was ¥49,617 million, down 23.4% year on year, operating profit was ¥1,120 million, down 57.3%, ordinary profit was ¥1,120 million, down 61.9%, and net profit attributable to owners of the parent was ¥1,452 million, down 38.0%. The operating margin also fell 1.7 percentage points, from 4.0% in the prior year to 2.3%. Accordingly, in assessing FY2027, the key question will be whether margins recover, rather than merely rebounding from the decline in profit.

The company's FY2027 forecast calls for revenue of ¥45,000 million, operating profit of ¥1,400 million, ordinary profit of ¥1,350 million, and net profit of ¥891 million. Revenue is planned to decline 9.3% year on year, while operating profit is expected to increase 25.0% and ordinary profit 20.5%. Net profit, however, is expected to decline 38.7%. Since net profit is expected to fall despite a recovery at the operating-profit level, the next earnings release should be reviewed for assumptions regarding the tax burden, extraordinary gains and losses, gains on the sale of shares in affiliates, and other one-off factors.

In the first quarter of FY2026, revenue was ¥11,946 million, operating profit was ¥207 million, ordinary profit was ¥186 million, and net profit was ¥18 million. In the first quarter of FY2027, these prior-year figures will provide the basis for assessing changes in operating profit as well as revenue. The available earnings forecast is only on a full-year basis, and no standalone first-quarter revenue or profit targets or quarterly allocation of profit have been disclosed. Disclosure of results by segment will therefore be essential for assessing progress toward the full-year plan.

The key questions in the next earnings release are whether the recovery in property sales is translating into the full-year operating profit target of ¥1,400 million, and whether higher profit from the franchise and finance businesses is offsetting the revenue decline caused by the contraction of the house leaseback business. The forecast of ¥891 million in net profit is also based on an expected dividend of ¥46 per share against earnings per share of ¥44.62. The consistency between the recovery in operating profit, final profit, and shareholder returns should therefore also be assessed.