1Q profit is tracking behind revenue against the FY2027 forecast

Revenue in 1Q of FY2027 was ¥2,255 million, up 15.0% year on year. Operating profit turned from a ¥26 million loss in the year-earlier period to a profit of ¥61 million, while ordinary profit was ¥56 million and net profit attributable to owners of the parent was ¥32 million. The operating margin was approximately 2.7%, improving from approximately negative 1.3% in the year-earlier period, but the quarterly profit level remains at an early stage relative to the full-year forecast.

The company's FY2027 full-year forecasts are revenue of ¥13,000 million, operating profit of ¥1,100 million, ordinary profit of ¥1,060 million and net profit of ¥680 million. Progress in 1Q was only 17.3% for revenue and 5.5% for operating profit. If half of the full-year figures were recorded evenly over six months, the mechanical H1 benchmarks would be revenue of ¥6,500 million and operating profit of ¥550 million. These are not figures the company has presented as H1 targets, but they are useful as a minimum benchmark for measuring the delay in profit recognition.

The company, however, has disclosed a tendency for revenue from renovations and goodroom solutions to be concentrated in the second half, particularly in March during the season for new starts in life. It is therefore too early to conclude that the full-year targets will be missed solely because 1Q progress was below 25%. At the same time, full-year FY2026 revenue had expanded to ¥11,505 million and operating profit to ¥933 million. Achieving the FY2027 forecasts of ¥13,000 million in revenue and ¥1,100 million in operating profit will therefore require an additional ¥1,495 million in revenue and ¥167 million in operating profit.

In the next H1, the company's explanation of the remaining revenue and profit required in the second half will be important, in addition to the cumulative absolute amounts of revenue and operating profit. In particular, it will be necessary to assess whether new goodroom solution facilities are contributing to profit as well as revenue, and whether standardised projects in the IT segment are lifting margins. The key point is whether the assumptions behind second-half project recognition, facility operations, and investment and SG&A expenses required to achieve the full-year forecast will be set out concretely for the first time, not merely whether the full-year forecast is revised.