Revenue is up, but profit has not absorbed the impact of the prior-year completion of large projects; profit progress in FY2026-Q3 is the focus.

FY2026-H1 consolidated revenue rose 6.6% year on year to ¥2,702.3 million. The increase was driven by rises in both total deployed headcount and contract rates in the technical staffing business. Operating profit, however, fell 9.0% to ¥244.7 million, ordinary profit fell 10.1% to ¥253.6 million, and interim net profit attributable to owners of the parent fell 10.2% to ¥167.7 million. The key point to verify in the next earnings release is that revenue growth has not flowed through to profit.

The full-year forecasts remain revenue of ¥5.55 billion, operating profit of ¥570 million, ordinary profit of ¥580 million and net profit of ¥390 million, with no revisions as of H1. Interim revenue progress was approximately 48.7%, calculated as ¥2,702.3 million ÷ ¥5.55 billion, close to the simple 50% midpoint of the fiscal year. Operating profit progress was only approximately 42.9%, calculated as ¥244.7 million ÷ ¥570 million. A practical measure of the likelihood of meeting the full-year forecasts is whether cumulative Q3 revenue and operating profit reach ¥41,625 million and ¥4,275 million, respectively, equivalent to 75% of the full-year forecasts.

The change in margins is also important. The FY2026-H1 operating margin was approximately 9.1%, calculated as ¥244.7 million ÷ ¥2,702.3 million. In the prior-year period, revenue was ¥2,534 million and operating profit was ¥269 million, implying an operating margin of approximately 10.6%. The margin therefore declined by approximately 1.6 percentage points. The company attributes the decline in profit to the negative comparison following the completion of large projects in Japan and overseas in the prior-year interim period. In Q3, it will be necessary to assess how much of this comparison-base effect remains and whether other cost factors, such as personnel expenses and investment in new businesses, are placing additional pressure on margins.

In the next Q3 results, the focus will be less on whether the full-year forecasts are maintained than on cumulative nine-month profit progress and the pattern of recovery in the second half. If only revenue approaches the 75% level while operating profit remains well below it, the burden on Q4 to achieve full-year profit will increase. Conversely, if operating profit recovers to around ¥427.5 million and the operating margin returns to the 10% range seen in the prior-year H1, the impact of completed large projects can be viewed as having largely run its course. In the Q3 earnings report, it will be useful to check, where available, whether the forecasts were revised, the year-on-year change in large projects, deployed headcount, contract rates and changes in SG&A expenses.