Confirm whether the FY2027 Q1 operating profit decline will reverse in H1

FY2027 Q1 revenue was approximately ¥5.789 billion and operating profit was approximately ¥194 million, down 5.6% and 45.7%, respectively, from approximately ¥6.134 billion and ¥357 million in the same period of the previous year. Ordinary profit was approximately ¥251 million, down 34.7%, while net income attributable to owners of the parent was approximately ¥163 million, down 31.3%, indicating a sharper decline at the operating profit level than at the top line. The full-year forecasts remain unchanged at revenue of ¥30.0 billion, operating profit of ¥2.2 billion and net income attributable to owners of the parent of ¥1.5 billion.

FY2026-H1, the comparison period, recorded revenue of ¥14.167 billion and operating profit of ¥1.232 billion. Based on FY2027 Q1 results, simple calculations indicate that approximately ¥8.378 billion of Q2 revenue would be required for H1 revenue to match the previous year's level, while approximately ¥1.038 billion of Q2 operating profit would be required for H1 operating profit to match it. These are not forecasts but mechanical amounts required to secure the previous H1 level, so the next results announcement should distinguish between sales being concentrated in Q2 and further delays in projects.

The operating margin calculated from Q1 results was approximately 3.36%, down approximately 2.46 percentage points from approximately 5.82% in the same period of the previous year. The FY2026-H1 operating margin was approximately 8.70%. Without detailed disclosure of cost of sales and gross profit, it cannot yet be determined whether the Q1 margin decline is merely seasonal or reflects structural deterioration due to price competition, product mix or insufficient fixed-cost absorption. The next results announcement should confirm recovery in gross margin or operating margin, not only operating profit.

The company cited reduced purchasing while customers awaited decisions on subsidy rates for government-subsidized projects, delays in starting new construction and renovation work and extensions to construction periods, intensified price competition, sales recognition shifting to Q2 or later, and a reactionary decline from the previous year's demand increase and large projects as factors behind the Q1 profit decline. In FY2027-H1, these factors should be assessed together with segment results to determine whether they were resolved through Q2 sales recognition or whether the assumptions underlying the full-year operating profit forecast of ¥2.2 billion have themselves weakened.