FY2026 focus: offsetting delayed revenue progress with margins

For the 9 months of FY2026, revenue was ¥18,910 million, up 2.0% year on year, while operating profit was ¥2,019 million, up 0.5%. The full-year plan calls for revenue of ¥27,400 million and operating profit of ¥2,850 million, representing progress rates of 69.0% and 70.9%, respectively. Compared with the simple 75% time-based progress benchmark after 9 months, revenue is further behind plan than operating profit.

Meeting the full-year plan will require fourth-quarter revenue of ¥8,490 million and operating profit of ¥831 million. This exceeds fourth-quarter revenue of approximately ¥6,231 million and operating profit of approximately ¥541 million in the previous fiscal year, equivalent to year-on-year increases of approximately 36% and 54%, respectively. The required operating margin is approximately 9.8%. Although this is not substantially below the approximately 10.7% operating margin for the 9-month period, the company will need to maintain high profitability while adding revenue.

On the profit side, ordinary profit was ¥2,061 million and net profit attributable to owners of the parent was ¥1,247 million, representing progress rates of 71.6% and 66.7%, respectively, against the full-year plan. Final profit is progressing more slowly than operating profit, requiring approximately ¥623 million in fourth-quarter net profit. The key point to verify will be whether profit can be secured on an operating-business basis, excluding the effects of non-operating and extraordinary items such as extraordinary gains, tax expenses and gains on sales of investment securities.

At the next earnings announcement, it will be necessary to determine whether the revenue shortfall is simply due to the timing of project recognition or reflects supply-side constraints such as insufficient partner-engineer capacity. We will also look for segment revenue and profit, operating margin, any revision to the full-year plan, factors behind any downside in net profit, and operating cash flow.