Revenue increased, but profitability narrowed; restoring the margin is the focus for FY2027-H1

Revenue in FY2027 1Q was ¥1,727.940 million, up ¥86.939 million from ¥1,641.001 million in the year-earlier quarter. Revenue reached 105.3% of the year-earlier level, but operating profit fell ¥37.046 million, from ¥63.255 million to ¥26.209 million, leaving it at 41.4% of the year-earlier level. Although revenue expanded, operating-level profit contracted.

The operating margin was approximately 1.52% in 1Q, down approximately 2.33 percentage points from approximately 3.85% in the year-earlier quarter. Operating profit, ordinary profit and net profit for the quarter were all positive, but the lower margin indicates the need to examine profitability factors including the product and project mix, raw-material costs, and manufacturing and selling costs, rather than attributing the change solely to temporary revenue fluctuations. If the 1Q operating margin of 1.52% continues through H1, the scope for achieving the full-year profit plan will narrow.

The company's FY2027 full-year plan calls for revenue of ¥7,500 million and operating profit of ¥206 million. Against this, progress stood at approximately 23.0% for revenue and approximately 12.7% for operating profit in 1Q. Since no official H1 earnings forecast has been provided, revenue of ¥3,750 million and operating profit of ¥103 million are analytical benchmarks obtained by simply halving the full-year plan, not company guidance.

To reach these benchmarks, 2Q alone would need to generate approximately ¥2,022.060 million in revenue and approximately ¥76.791 million in operating profit. In the next results announcement, the points to check will be not only whether cumulative H1 operating profit reaches ¥103 million, but also whether the FA segment has returned to profitability, whether the Trading segment's high profitability has continued, and whether improvements in cost of sales and project profitability have restored the operating margin to at least the upper 2% range.