Can the delay in first-quarter profit progress be shown to be temporary in the first half?

First-quarter revenue for the fiscal year ending March 2027 was ¥1,118 million, up 2.0% year on year, while operating profit was ¥86 million, down 14.7%, ordinary profit was ¥95 million, down 7.0%, and net income was ¥67 million, down 2.6%. Operating profit and below declined despite revenue growth, so the key question is not simply revenue scale but whether the project mix and cost absorption capacity recover in the first half and thereafter.

The full-year forecasts are ¥5,300 million in revenue, ¥480 million in operating profit, ¥486 million in ordinary profit and ¥333 million in net income, with no revisions as of the first quarter. Progress against the full-year forecasts was 21.1% for revenue, 18.0% for operating profit, 19.6% for ordinary profit and 20.2% for net income. Compared with a simple 25% time-based run rate after three months, operating profit in particular was below pace. Deducting first-quarter results from the full-year forecasts leaves ¥4,182 million in revenue and ¥394 million in operating profit to be generated over the remaining 9 months, but the company has not disclosed seasonality or the monthly levels required over the remaining period.

The company cited the reversal of the impact of a large project in the prior-year quarter and changes in the project mix in the Solutions business, and the reversal of special demand associated with the end of FOMA services in the Mobile business, as factors behind the profit decline. These factors suggest that unusual prior-year effects may have fallen away, but the company has not disclosed the revenue or profit decline attributable to each factor or the extent of recovery in ordinary projects. In the first half, it will be necessary to determine, based on profit amounts and segment details, whether the impact of special-demand reversal has run its course and year-on-year operating profit improves, or whether changes in the project mix and higher selling, general and administrative expenses continue.

The first-quarter results presentation includes the full-year forecasts and progress rates, but does not state the company’s own assessment of whether results are on plan, below plan or require a recovery effort, nor the revenue and operating profit levels required over the remaining period. Accordingly, at the first-half results announcement, it is important to examine four items together: cumulative first-half revenue and operating profit, year-on-year changes, progress against the full-year forecasts, and the amounts required in the second half.