1Q profit is lagging sales against the full-year operating profit plan

In the first quarter of the fiscal year ending March 2027, sales were ¥2,456 million, up 1.2% year on year, operating profit was ¥85 million, up 4.4%, ordinary profit was ¥91 million, up 7.6%, and net profit attributable to owners of the parent was ¥56 million, up 12.4%. Each stage of profit exceeded the year-earlier period, but progress toward the full-year forecast was 23.6% for sales, 13.5% for operating profit and 13.5% for net profit, leaving operating profit about 10 percentage points behind sales.

The full-year forecasts are sales of ¥10,418 million, operating profit of ¥631 million, ordinary profit of ¥652 million and net profit of ¥415 million, and were unchanged as of 1Q. If 50% of the annual forecast is used as a simple H1 benchmark, cumulative sales of ¥5,209 million and operating profit of ¥315.5 million would be reference points for FY2027-H1. Working backward from 1Q results, 2Q alone would need to generate approximately ¥2,753 million in sales and approximately ¥230.5 million in operating profit, making the extent of the profit build-up in 2Q important.

To achieve the full-year forecast over the 3 quarters remaining after 1Q, the company needs ¥7,962 million in sales and ¥546 million in operating profit, or quarterly averages of ¥2,654 million and ¥182 million, respectively. The sales average is approximately 8.1% above 1Q sales of ¥2,456 million. The company cites orders from existing customers and steady performance at subsidiaries as factors behind the sales increase, while also referring to a temporary rise in expenses from revising its salary structure.

In H1, the focus will be not only on confirming higher sales and profit year on year, but also on whether cumulative operating profit reaches around ¥315.5 million and whether the operating margin improves from approximately 3.49% in 1Q. As the company has not disclosed order intake, order backlog or profit contributions by factor, another point to assess is whether the basis for maintaining the full-year forecast lies in continued projects, subsidiary earnings or the normalization of expenses.