Recovery in operating profit against the full-year plan is the focus for the second half

Consolidated revenue for the first half of the fiscal year ending December 2026 was ¥11,091 million, up 11.5% year on year, representing progress of 49.8% against the full-year forecast of ¥22,286 million. Operating profit, however, was ¥585 million, down 1.5% year on year, representing progress of 36.0% against the full-year forecast of ¥1,622 million. The earnings presentation also showed that the operating margin was 5.3%, down 0.7 percentage points from 6.0% in the same period last year, indicating that revenue growth has not translated directly into profit growth.

Revenue in the second quarter alone was ¥5,524 million and operating profit was ¥154 million. As operating profit fell from ¥430 million in the first quarter to ¥154 million in the second quarter, the company will need to generate ¥1,037 million of operating profit in the second half to achieve its full-year target. On a simple nine-month progress basis, the benchmarks would be revenue of ¥16,715 million and operating profit of ¥1,217 million. However, the company expects to recognize revenue from some overseas large-customer contracts mainly in the fourth quarter, so a simple quarterly allocation may not be appropriate.

The October revision to the earnings forecast left the full-year forecasts unchanged at revenue of ¥22,286 million, operating profit of ¥1,622 million and ordinary profit of ¥1,589 million. Accordingly, at the next earnings announcement, it will be necessary to check not merely whether revenue increased year on year, but whether the operating margin has recovered from 5.3% and whether the likelihood of recovering profit in the second half has increased on a nine-month cumulative basis. The quantitative assumptions for exchange rates, development costs and contract recognition timing, as well as the amount of risk incorporated into the full-year target, have not been disclosed in detail.