A strong start with sharply higher 1Q profit, but H1 focus is on quantifying progress toward the full-year forecast

In 1Q of the fiscal year ending March 2027, revenue was ¥40,452 million, up 32.9% year on year, while operating profit was ¥3,279 million, up 223.4%. The operating margin was 8.1%, approximately 4.8 percentage points higher than the roughly 3.3% recorded in the same period of the previous year. The main driver of higher revenue and profit was progress on plants already ordered in the domestic Environment and Energy business. Looking only at the 1Q figures, the ramp-up in profit was strong.

However, with full-year forecasts of ¥191,000 million in revenue and ¥17,800 million in operating profit, 1Q progress was approximately 21.2% and 18.4%, respectively. On a simple six-month basis, H1 revenue of ¥95,500 million and operating profit of ¥8,900 million represent key checkpoints. The operating margin implied by the full-year forecast is approximately 9.3%. The key question is whether the margin improves from 8.1% in 1Q through H1, or whether the sharp growth in 1Q was affected by the timing of project recognition.

H1 results for the same period of the previous year were revenue of ¥70,110 million and operating profit of ¥4,117 million. As revenue and operating profit in the previous year's 1Q were ¥30,444 million and ¥1,013 million, respectively, standalone Q2 revenue and operating profit can be calculated at ¥39,666 million and ¥3,104 million. In this year's H1, the focus should be not only on whether cumulative figures exceed the previous year, but also on whether standalone Q2 exceeds these levels and sustains the profit growth seen in 1Q.

The 1Q supplementary materials describe the full-year outlook as progressing steadily, but do not provide progress rates against the full-year forecast or specific amounts of revenue and operating profit required over the remaining 9 months. In H1, the focus will be on standalone Q2 revenue and operating profit, cumulative progress rates and any revisions to the full-year forecast, as well as segment-level figures showing whether progress on domestic plants continues into the second half.