Test the FY2027 profit recovery plan in the first quarter

Revenue for FY2026 was ¥2,862 million, down 0.1% year on year and essentially flat. Operating profit was ¥64 million, ordinary profit was ¥54 million and net income was ¥34 million, down 67.0%, 71.5% and 75.0%, respectively, from the prior year. The operating margin also fell 4.6 percentage points, from 6.9% to 2.3%, so the next results announcement will start from a position where profit has fallen substantially despite revenue holding steady.

The company’s full-year FY2027 forecast is revenue of ¥2,977 million, operating profit of ¥111 million, ordinary profit of ¥104 million and net income of ¥72 million. Compared with the prior-year results, these represent increases of 4.0% in revenue, 73.0% in operating profit, 92.4% in ordinary profit and 110.5% in net income, indicating a plan that expects a much stronger profit recovery than revenue growth. Dividing forecast operating profit of ¥111 million by revenue of ¥2,977 million gives a forecast full-year operating margin of approximately 3.7%. The next results announcement should therefore show whether there are signs of approaching this level on a simple quarterly comparison. However, quarterly seasonality cannot be determined from the disclosed information, so 3.7% is a mechanical benchmark, not a forecast based on dividing the full-year plan into four equal quarters.

FY2026-Q1 results were revenue of ¥736 million and operating profit of ¥44 million. Accordingly, whether FY2027-Q1 can at least exceed the prior-year figures of ¥736 million in revenue and ¥44 million in operating profit will be a practical benchmark for judging year-on-year recovery. Operating profit in particular should be assessed in terms of whether improvements in project margins from cost control and greater work efficiency continue, whether company-wide expenses such as advertising and promotion costs rise again, and whether utilization in contracted development begins to recover.

The only forecast disclosed at present is the FY2027 full-year forecast. No standalone FY2027-Q1 forecast for revenue or operating profit, or quarterly profit plan, can be confirmed. At the next results announcement, the company’s view of progress against the full-year forecast, the assumptions underlying the forecast and its explanation of the cost items supporting the profit recovery will therefore be important in addition to the actual figures. Even if the full-year forecast is maintained, if Q1 operating profit falls below the prior-year level and moves farther from the 3.7% operating-margin forecast, it will be necessary to determine whether the recovery is weighted toward the second half or whether the assumptions underlying the plan have changed.