Can the FY2026 earnings recovery lead to full-year earnings growth from FY2027-Q1?

Consolidated revenue in FY2026 was ¥4,466 million, up just 0.6% year on year, while operating income was ¥82 million, up 21.0%, and ordinary income was ¥106 million, up 19.4%. The operating margin improved from 1.5% in the previous fiscal year to 1.8%, confirming an earnings recovery, albeit from a low level. However, FY2026 operating income of ¥82 million represented only about 1.8% of revenue of ¥4,466 million, so the absolute level of profitability remains low.

For FY2027, the company forecasts revenue of ¥4,820 million, operating income of ¥105 million, ordinary income of ¥160 million, and net income attributable to owners of the parent of ¥85 million. The plan calls for revenue growth of 7.9% and operating income growth of 27.9% year on year, assuming an increase in the growth rate from FY2026's modest revenue growth. In particular, the increase in operating income is only ¥23 million. Even if revenue grows as planned, the likelihood of achieving the full-year forecast will decline if earnings fail to grow because of higher outsourcing and personnel costs.

The company has not disclosed a quarterly forecast for FY2027-Q1, so revenue of ¥1,205 million and operating income of ¥26.25 million are merely analytical benchmarks based on dividing the full-year forecast into four equal parts. FY2026-Q1 recorded revenue of ¥1,082 million and an operating loss of ¥11 million, suggesting that the company may find it difficult to generate earnings in the first quarter. Accordingly, even if an operating loss occurs in Q1, it is necessary to assess separately whether it has improved from the previous year's ¥11 million and whether revenue exceeds the prior-year quarter.

At the next earnings announcement, we will look for more than simply an unchanged full-year forecast. We will review actual FY2027-Q1 revenue, operating income and segment earnings, together with management's assessment of progress toward the full-year forecast. Disclosure explaining quarterly standalone earnings and seasonality is limited, so it will be important to see not only revenue but also the initial development of earnings after outsourcing and SG&A expenses, as well as the basis for maintaining the full-year forecast of ¥4,820 million in revenue and ¥105 million in operating income.