H1 results will test the case for a second-half-weighted earnings profile

In the first quarter of the fiscal year ending March 2027, revenue was ¥1,366 million and operating profit was ¥44 million. The full-year forecasts are revenue of ¥6,300 million and operating profit of ¥300 million, representing progress rates of 21.7% and 14.9%, respectively. Compared with the 25% of the fiscal year that had elapsed, revenue was approximately 3.3 percentage points behind and operating profit approximately 10.1 points behind, indicating a substantial profit shortfall on a simple linear basis.

The company nevertheless maintained its full-year forecasts and explained that C&S's Q1 loss was within plan. The earnings outlook assumes that investment in C&S will be concentrated in H1 and that revenue will be weighted toward H2 because of seasonality. Therefore, H1 operating profit falling below ¥150 million would not immediately indicate a failure to meet the full-year forecast, but the extent to which profit is expected to accumulate in H2 needs to be confirmed numerically.

Subtracting Q1 results from the full-year forecasts leaves ¥4,934 million of revenue and approximately ¥256 million of operating profit required from Q2 onward. Achieving these levels over the remaining 3 quarters will require not only revenue growth but also simultaneous productivity improvements through the use of AI and recovery of the C&S investment. In the H1 results, it will be important to disclose standalone Q2 revenue and operating profit in addition to cumulative figures, making it possible to distinguish whether Q1's low progress was due to seasonality or delayed projects.

The key items to confirm are H1 cumulative revenue and operating profit, C&S's loss, and whether the full-year forecasts are revised. In particular, the credibility of the plan will depend on how much of the ¥300 million full-year operating profit target remains to be achieved at the H1 stage and how specifically the company can explain H2 profitability and profit contribution.