Flow gross profit reached 69.6% of the full-year target, with completion of the remaining ¥1,127 million in work the key focus

The flow gross profit from completed projects disclosed in the third-quarter flash report was ¥2,573 million, including ¥985 million recognized in the three months from July to September 2026. Progress against the full-year target of ¥3,700 million was 69.6%, leaving ¥1,127 million to reach the target based on a simple calculation. The flash report did not disclose reported net sales, operating profit, ordinary profit or net income attributable to owners of the parent, so full-year profit achievement cannot be assessed based solely on progress in flow gross profit.

There are also discrepancies in the disclosed targets that require confirmation. The second-quarter flash report gave a full-year forecast of ¥3,200 million for flow gross profit from completed projects, while the second-quarter results presentation and third-quarter flash report showed ¥3,700 million. Whether this represents an upward revision to the target or a change in the scope or definition of the figures is an issue that should be explained in the formal results. If the target is confirmed at ¥3,700 million, progress of 69.6% appears high, but ¥1,127 million would still need to be completed in three months.

In terms of orders, flow gross profit from orders received in the third quarter was ¥985 million, bringing the cumulative total to ¥3,637 million. Meanwhile, flow gross profit from orders outstanding was ¥2,110 million at the end of the first quarter, ¥2,426 million at the end of the second quarter and ¥2,232 million at the end of the third quarter, a decline of ¥194 million from the previous quarter-end. It is necessary to determine, together with the composition of outstanding orders, whether this decline resulted from progress in project completion or from a slowdown in new orders and changes in the project mix. The company has explained that lead times can exceed 90 days depending on project scale, so project size and completion timing will affect the timing of sales and gross profit recognition in the fourth quarter.

In the formal third-quarter results, it will be important to disclose how the flash-report flow gross profit of ¥2,573 million links to consolidated net sales, gross profit and operating profit. In particular, as cumulative third-quarter reported net sales, operating profit, progress against the full-year forecast and any revision to the full-year forecast remain undisclosed, the 69.6% progress in flow gross profit cannot be equated with progress toward the profit plan. The amount of the ¥2,232 million in outstanding orders that can be completed and recognized as sales during the year, and the amount carried forward to subsequent fiscal years, should also be explained.