Q1 led with profit, but full-year operating profit is planned to decline

In Q1 of the fiscal year ending March 2027, revenue was ¥2,841 million, operating profit was ¥407 million, ordinary profit was ¥439 million, and profit attributable to owners of the parent was ¥298 million. Revenue increased 16.5% year on year and operating profit rose 246.3%, with the operating margin calculated from revenue and operating profit at approximately 14.3%. Compared with operating profit of ¥117 million in Q1 of the previous fiscal year, profit growth significantly outpaced revenue growth.

However, the full-year forecasts are revenue of ¥13,630 million, operating profit of ¥1,220 million, ordinary profit of ¥1,060 million, and net profit of ¥690 million. Operating profit is expected to decline 24.7% and ordinary profit 33.7% from the previous year's results. Dividing Q1 results mechanically by the full-year forecasts gives progress rates of 20.8% for revenue and 33.4% for operating profit. Operating profit progress exceeding revenue progress is positive in itself, but the high-margin projects, cost improvements and foreign-exchange gains recorded in Q1 may include temporary contributions.

At the next first-half results, a simple 50% benchmark of the full-year forecasts would be revenue of ¥6,815 million and operating profit of ¥610 million. However, the timing of property sales and construction revenue is affected by seasonality and project-specific progress. Rather than viewing failure to meet these benchmarks as an immediate reason for a downward revision, it will be necessary to assess which of the environmental solutions, real estate revitalization and renewable energy businesses generated first-half revenue and profit.

The full-year earnings forecasts were not revised at the Q1 results, and the annual dividend forecast remains unchanged at ¥24. Accordingly, the key issue at the first-half results is not simply higher revenue and profit, but whether the improved cost ratio and contribution from high-margin projects underlying the conservative full-year operating profit forecast of ¥1,220 million are repeatable, and whether the assumptions behind the full-year forecasts have changed as of the second quarter.