H1 is leading on revenue; Q3 will show how likely full-year operating profit is to be achieved

FY2026-H1 consolidated revenue was ¥9,231 million, operating profit was ¥761 million, ordinary profit was ¥783 million, and interim net profit attributable to owners of the parent was ¥482 million. The full-year forecasts are revenue of ¥18,000 million, operating profit of ¥1,600 million, ordinary profit of ¥1,600 million and net profit of ¥1,000 million, implying simple progress rates of 51.3%, 47.6%, 48.9% and 48.2%, respectively. Revenue is above the 50% mark at the halfway point, while operating profit and net profit are below 50%.

For operating profit, H1 results of ¥761 million against the full-year target of ¥1,600 million mean that ¥839 million must be added in the second half. Although profit increased year on year, operating profit growth was limited to 4.4%, compared with 7.2% revenue growth. The company has not disclosed whether profit growth will accelerate from Q3 onward or whether the forecast assumes that profit will be weighted toward the second half. Reaching operating profit of ¥1,200 million on a cumulative Q3 basis will be one benchmark for measuring standard progress against the full-year plan.

The company has not disclosed standalone Q3 or second-half earnings forecasts, quarterly seasonality, or a breakdown of project acceptance by timing. It is therefore necessary to determine, from revenue by segment, gross margin, outsourcing costs and the status of accepted projects, whether H1 revenue growth resulted from projects being brought forward or temporary acceptances, or from sustained improvements in orders and utilisation from Q3 onward. If revenue alone continues to exceed plan while operating profit remains below 50% progress, achieving full-year operating profit of ¥1,600 million will require margin improvement in the second half.

The full-year earnings forecast and annual dividend forecast of ¥14 were unchanged at the interim results. In Q3, the focus should be less on simply maintaining the full-year forecast and more on whether the company explains the specific projects supporting the ¥839 million of operating profit required in the second half, segment-level profitability, and the scope to absorb increases in recruitment and amortisation costs.