The FY27 earnings growth plan hinges more on validating margin improvement than on revenue growth

FY26 consolidated revenue was ¥5,131 million, down 8.0% year on year, operating profit was ¥165 million, down 61.3%, and net income attributable to owners of the parent was ¥19 million, down 92.6%. The operating margin also fell 4.5 percentage points, from 7.7% to 3.2%, so the FY27 plan assumes not merely a recovery in revenue but a rebuilding of profitability.

The company's FY27 plan calls for revenue of ¥5,400 million, operating profit of ¥300 million, ordinary profit of ¥298 million and net income attributable to owners of the parent of ¥80 million. Compared with FY26 actual results, revenue is expected to increase by ¥269 million and operating profit by ¥135 million, representing an 80.9% increase in operating profit. The plan therefore incorporates a scenario in which profit recovers substantially through curbing low-margin projects, improving pricing and expanding recurring revenue, even with limited revenue growth.

If FY27 Q1 is viewed simply as one-quarter of the full-year plan, the reference progress points are revenue of ¥1,350 million and operating profit of ¥75 million. However, the company has described its past earnings structure, including one-off projects and a concentration of earnings in the fourth quarter, as challenges, so even quarterly progress cannot be regarded as the company's formal quarterly target. Even so, whether the company can remain operationally profitable in Q1 and improve on the loss recorded in the same quarter of the previous year will be important as an initial test of the ¥300 million plan.

At the next earnings release, we would like to confirm not only Q1 revenue and operating profit on a standalone basis, but also progress against the full-year forecast and the reasons for maintaining or revising the full-year plan. Previous presentation materials have not disclosed the quarterly allocation of revenue and profit underlying the full-year plan, the contribution of individual projects or the risk amounts incorporated into the plan. The key point will therefore be how specifically the company quantifies, beyond the Q1 figures themselves, the profit level required during the remaining period to achieve ¥300 million.