Can operating profit continue to rise despite lower revenue, and how much pressure will the second half face to meet the full-year plan?

In the interim period from January through June FY2026, revenue was ¥5.370 billion, down 7.5% year on year. Operating profit, however, rose 6.7% to ¥272 million, while ordinary profit increased 7.3% to ¥289 million, absorbing the decline in revenue at the profit level. Interim net income attributable to owners of the parent was ¥189 million, down 6.8% year on year, so the improvement at the operating level did not flow through consistently to net income.

The operating margin was approximately 5.1% in the interim period, up approximately 0.7 percentage points from approximately 4.4% in the same period of the previous year. The full-year company forecasts remain unchanged at revenue of ¥11.8 billion, operating profit of ¥620 million, ordinary profit of ¥660 million and net income attributable to owners of the parent of ¥460 million. Interim-period progress rates were 45.5% for revenue, 43.9% for operating profit, 43.8% for ordinary profit and 41.1% for net income, with both revenue and profit below the 50% mark implied by the passage of half the fiscal year.

To meet the unchanged full-year forecasts, the company will need second-half revenue of ¥6.429 billion, operating profit of ¥348 million, ordinary profit of ¥371 million and net income of ¥271 million. In the second half of FY2025, revenue was approximately ¥6.120 billion and operating profit approximately ¥343 million. The current plan therefore assumes increases of approximately 5.1% in revenue and approximately 1.5% in operating profit from the previous year's second half. Whether the interim-period revenue decline reflects a temporary timing difference in project recognition or weaker demand will determine the likelihood of meeting the full-year plan.

For the third quarter of the FY2026 fiscal year ending December, it will be important to confirm whether cumulative revenue is approaching at least approximately 70% of the full-year forecast and whether cumulative operating profit has risen to the low ¥400 million range or higher. In particular, it is necessary to confirm whether the operating margin can remain around the interim-period level of 5.1%, whether second-half revenue recognition is concentrated in specific projects, and whether the factors behind the decline in net income are temporary tax or non-operating items.