FY2027 March year-end started slowly in the first quarter, requiring strong profit generation in the second half

Revenue for the first quarter of the fiscal year ending March 2027 was ¥4,989 million, down 2.8% year on year. Progress against the full-year revenue forecast of ¥24,000 million was approximately 20.8%, below the 25% implied by a simple even quarterly split. Operating income/loss swung from operating income of ¥17 million in the same period of the previous year to an operating loss of ¥134 million. Ordinary loss was ¥87 million, while net loss attributable to owners of the parent was ¥67 million.

The full-year forecasts remain unchanged at revenue of ¥24,000 million, operating income of ¥1,200 million, ordinary income of ¥1,230 million and net income attributable to owners of the parent of ¥810 million. Assuming an operating loss of ¥134 million in the first quarter, the company will need to generate operating income of ¥1,334 million in the remaining second through fourth quarters. Revenue would also need to reach ¥19,011 million over the remaining 3 quarters. How far revenue and profitability can recover in FY2027-H1 will therefore be important.

Seasonality requires attention. The company has consistently disclosed a business structure in which acceptance inspections are concentrated in the fourth quarter and revenue and profit are weighted toward the fiscal year-end. The first-quarter revenue progress of 20.8% should therefore not be read as indicating a full-year shortfall without further analysis. By contrast, FY2026-H1 revenue was ¥10,721 million and operating income was ¥300 million, while FY2026 full-year revenue was ¥22,724 million and operating income was ¥1,130 million. A simple calculation of FY2026 full-year second-half results gives revenue of ¥12,003 million and operating income of ¥830 million. Profit generation during the remaining period of FY2027 will therefore need to substantially exceed this level.

At the next results announcement, the key points will be whether cumulative second-quarter revenue exceeds the ¥10,721 million recorded in the same period of the previous year and whether operating income/loss has returned to at least breakeven. In particular, the focus will be on whether the system development business and SI business, both of which reported losses in the first quarter, are recovering not only through progress on second-half projects but also through improved project profitability. Even if the full-year forecast is not revised, unless operating income recovers to around ¥300 million by FY2027-H1, reaching the full-year operating income target of ¥1,200 million will become even more dependent on the second half.