FY2027-Q1 was profit-led; confirming repeatability in H1 is necessary to achieve the full-year forecast.

FY2027-Q1 revenue was ¥3,751 million, up 0.8% year on year and essentially flat. Operating profit was ¥194 million, ordinary profit was ¥165 million and quarterly net profit was ¥111 million, representing increases of 35.9%, 37.8% and 61.9%, respectively. The operating margin was approximately 5.2%, calculated by dividing operating profit of ¥194 million by revenue of ¥3,751 million, improving from approximately 3.8% in the same period last year. The results can be characterized as earnings being driven more by improvements in selling prices, gross margin, production efficiency and project profitability than by revenue growth.

The full-year forecasts are revenue of ¥20,000 million, operating profit of ¥1,000 million, ordinary profit of ¥900 million and net profit of ¥650 million, putting Q1 progress at 18.8%, 19.5%, 18.3% and 17.1%, respectively. Operating profit progress is slightly ahead of revenue progress, but the first half is not simply half of the full year, as quarterly earnings are prone to fluctuate depending on delivery timing and the composition of properties. Accordingly, the improvement in Q1 margins alone should not be treated as evidence of an upward revision to the full-year forecast. It is necessary to confirm in FY2027-H1 whether operating profit exceeds the ¥301 million recorded in the same period last year and revenue exceeds ¥7,545 million.

The improvement in earnings reflects higher selling prices and gross margins in built-for-sale housing, despite deliveries declining from 73 units to 61 units year on year, as a result of selective land purchases and construction and sales tailored to customer needs. In custom-built housing, deliveries increased from 13 to 16 units, with the maintenance of order price levels, improved production efficiency and improved profitability of contracted projects contributing to earnings. However, the Q1 results summary does not disclose the contribution from each factor or the company-wide gross margin.

At the next results announcement, the focus will be on whether the year-on-year increase in operating profit was due to a one-off property mix and whether improvements in built-for-sale housing unit prices and gross margins and in custom-built housing production efficiency are continuing. In particular, the points to confirm will include FY2027-H1 segment revenue, operating profit, deliveries and selling prices, as well as progress against the full-year forecast and whether the earnings forecast has been revised. No quarterly cash flow statement was prepared for Q1, so whether earnings growth is also supported by cash generation remains unconfirmed until the next results announcement.