Revenue growth planned, but lower profit in FY2027; initial Q1 test of cost absorption

In FY2026, revenue was ¥5,079 million, operating profit was ¥432 million, ordinary profit was ¥444 million and net income attributable to owners of the parent was ¥298 million, all above the previous year. However, growth was limited to 3.9% for revenue, 0.3% for operating profit, 0.6% for ordinary profit and 1.5% for net income, meaning that revenue growth translated into almost no profit growth.

For FY2027, the company forecasts revenue of ¥5,200 million, operating profit of ¥400 million, ordinary profit of ¥400 million and net income of ¥260 million. Compared with FY2026 actual results, revenue is up ¥121 million, operating profit is down ¥32 million, ordinary profit is down ¥44 million and net income is down ¥38 million. Based on a simple calculation, the operating margin is expected to decline from 8.5% in FY2026 to approximately 7.7% in the FY2027 forecast.

In the most recent FY2026-Q1, revenue was ¥806 million, operating loss was ¥13 million, ordinary loss was ¥9 million and net loss was ¥8 million. After deteriorating sharply from revenue of ¥1,133 million and operating profit of ¥97 million in the same quarter of the previous year, full-year results recovered with contributions from large projects and labor-saving projects. Accordingly, in the next Q1, the short-term points to verify will be not only whether results improve year on year, but also whether revenue exceeds ¥806 million and operating profit rises above break-even.

Regarding the business environment for FY2027, the company expects increases in construction costs, labor shortages, procurement prices and labor costs, as well as revisions to or cancellations of construction plans. At the same time, it has not disclosed quarterly earnings forecasts, order backlog or profit contributions by factor. In FY2027-Q1, we will assess orders and sales of structural steel processing machines, the effects of selling-price revisions, gross margin, and increases in fixed costs and labor costs, in order to determine whether the company’s forecast of lower profit despite higher revenue is reasonable.