The forecast for a 58.1% increase in operating profit in the fiscal year ending June 2027 must be validated through PMI

In the fiscal year ended June 2026, consolidated revenue increased 9.3% year on year to ¥96,839 million, while operating profit fell 22.9% to ¥1,426 million. Gross profit was ¥13,135 million and selling, general and administrative expenses were ¥11,708 million, with the costs associated with M&A and store expansion weighing on earnings. The operating margin also fell 0.6 percentage points, from 2.1% in the previous fiscal year to 1.5%, confirming in the latest results that scale expansion alone does not improve profitability.

The company forecasts revenue of ¥116,416 million, operating profit of ¥2,255 million, ordinary profit of ¥2,075 million and profit attributable to owners of the parent of ¥1,256 million for the fiscal year ending June 2027. The plan calls for operating profit to increase 58.1% year on year and revenue to rise 20.2%, with the increase in operating profit amounting to ¥829 million. The operating margin is also premised on rising 0.4 percentage points from 1.5% to 1.9%, requiring more than simply adding revenue. It will require a reduction in losses at post-M&A stores, absorption of personnel, facility and depreciation costs, and more efficient SG&A through PMI.

The growth assumptions are the full-year contribution from transactions acquired in prior fiscal years and existing business transfers completed during the fiscal year ending June 2027. The earnings presentation indicates that 4 M&A transactions and business transfers were completed in fiscal 2026 and 3 had already been completed in fiscal 2027, while recent news indicates that 7 M&A transactions are expected to make a full-year contribution. The forecast includes only already announced transactions and does not assume any additional new M&A. Accordingly, in the first quarter, it will be necessary to determine which businesses have moved into profit growth from the fiscal year ended June 2026 mix of ¥58,110 million in revenue and ¥2,243 million in segment profit for the imported-car dealership business, and ¥38,728 million in revenue and ¥376 million in segment profit for the used-car export-related business.

For the first-quarter assessment, revenue of ¥29,104 million and operating profit of approximately ¥564 million are used as mechanical benchmarks that ignore seasonality. These are not quarterly forecasts provided by the company, but merely screening levels calculated by dividing the full-year forecast by 4. In practice, in addition to the amounts themselves, it will be necessary to examine the loss levels at stores subject to PMI, the rate of increase in SG&A, operating profit by segment, and increases in goodwill and depreciation expenses resulting from M&A, and to verify whether higher revenue is translating into gross profit and operating profit.