FY2027 plan focuses on recovering the operating margin rather than increasing revenue

In FY2026, revenue was ¥25,959 million, up 12.4% year on year, while operating profit was ¥6,914 million, down 2.6%, and ordinary profit was ¥6,930 million, down 2.8%. The operating margin fell 4.1 percentage points from 30.7% in the previous fiscal year to 26.6%, indicating that revenue growth did not translate directly into higher operating profit. Meanwhile, net income rose to ¥9,830 million on extraordinary gains that included a ¥6,792 million gain on sales of investment securities. The improvement in net income therefore does not directly indicate a recovery in the core business.

The company's FY2027 plan calls for revenue of ¥29,380 million, operating profit of ¥9,012 million, ordinary profit of ¥9,012 million and net income of ¥6,222 million. Revenue is expected to increase 13.2% year on year and operating profit 30.3%, implying a simple operating margin calculation of approximately 30.7%. This would represent an improvement of approximately 4.1 percentage points from FY2026's 26.6%, returning the margin to the FY2025 level. The revenue plan has also been broken down into ¥13,840 million for the KeePer products and related business and ¥15,540 million for the KeePer LABO operating business.

In FY2027-Q1, it will be necessary to assess not only whether revenue increased but also what drove the recovery in the operating margin. In FY2026, growth investment, additional hiring, store-related expenses and advertising expenses weighed on profit. Achieving the planned increase in operating profit in FY2027 will therefore require not only revenue growth but also the normalization of these cost burdens and the realization of investment benefits. The earnings presentation provides a full-year plan, but does not disclose quarterly revenue and operating profit targets or numerical assumptions for raw material prices, advertising expenses and personnel costs.

The FY2027 net income plan is also 36.7% below FY2026 actual net income. Rather than indicating deterioration in the core business, this reflects the assumption that the large gain on sales of securities recorded in FY2026 will not recur in the following fiscal year. Accordingly, the most important comparisons in the next results announcement will be year-on-year operating profit, the operating margin, the profit contribution of both segments, and progress against the full-year operating profit plan of ¥9,012 million, rather than year-on-year net income.