Q1 revenue rose but profit fell, with progress at roughly one-quarter of the full-year plan; the focus is on a recovery in margins in the first half

FY2027-Q1 revenue rose 9.3% year on year to ¥9,300 million, while operating profit fell 4.4% to ¥826 million, ordinary profit fell 3.4% to ¥847 million and net profit for the quarter fell 13.5% to ¥570 million. Profit declined despite higher revenue, with the operating margin falling from approximately 10.2% in the year-earlier quarter to approximately 8.9% in the current quarter.

The full-year forecasts are revenue of ¥39,000 million, operating profit of ¥3,500 million, ordinary profit of ¥3,500 million and net profit of ¥2,460 million. Q1 progress was 23.8%, 23.6%, 24.2% and 23.2%, respectively. On a simple basis of equal quarterly progress, these figures are close to 25%, and the company described performance as broadly in line with plan. However, operating profit progress was slightly below revenue progress, so the extent to which margins can recover by the end of the first half will determine the likelihood of achieving the full-year plan.

FY2026 full-year revenue was ¥35,698 million, operating profit was ¥3,036 million and the operating margin was 8.5%, each a record high. In contrast, FY2027-Q1 was affected by a decline from the previous year's high-margin projects and higher costs on some projects, meaning the benefit of higher revenue was not fully reflected in operating profit. The company did not prepare a quarterly cash flow statement for Q1, and no supporting evidence from operating or investing cash flow was disclosed for the profit figure, which should also be noted.

For FY2027-H1, project progress and profit accumulation should be monitored against revenue of ¥19,500 million and operating profit of ¥1,750 million, the simple half-year benchmarks based on the full-year plan. In particular, if the operating margin remains below FY2026's full-year level of 8.5%, dependence on the second half to achieve full-year operating profit of ¥3.5 billion will increase. Conversely, if operating profit reaches around ¥1.75 billion in the first half and the full-year forecast and annual dividend of ¥68 are maintained, it will be easier to determine whether the Q1 decline was limited to temporary project-related factors.