First-quarter results were on plan, but the focus is whether the high profit margin can be maintained through the first half

First-quarter revenue was ¥5,680 million, up 11.2% year on year, while operating profit was ¥1,505 million, up 20.2%. Ordinary profit was ¥1,528 million and quarterly net profit was ¥1,085 million, up 19.7% and 25.0%, respectively. Profit grew faster than revenue, indicating that, at least in the first quarter alone, revenue growth translated into higher profit.

The full-year forecasts are revenue of ¥25,400 million, operating profit of ¥6,250 million, ordinary profit of ¥6,310 million and net profit of ¥4,420 million. First-quarter progress was 22.4%, 24.1%, 24.2% and 24.6%, respectively. Compared with a simple 25% quarterly allocation, revenue was slightly below plan, while the profit items were generally close to plan. If reaching 50% in the first half is used as a mechanical benchmark, revenue of ¥12,700 million and operating profit of ¥3,125 million will be the key figures to monitor.

The first-quarter operating margin was 26.5%, up approximately 2.0 percentage points from approximately 24.5% in the first quarter of the previous fiscal year. It was also high compared with the 25.7% full-year operating margin for the fiscal year ended March 2026 and the 24.6% target for the fiscal year ending March 2027. However, the first-quarter materials did not disclose the amounts of changes in cost of sales or SG&A expenses, or the breakdown of the improvement in the cost ratio. It is therefore not possible to quantify whether the higher margin was primarily attributable to pricing, project mix, material costs or construction efficiency.

The company attributed the higher revenue and profit to increased demand for high-value-added projects, growth in repair projects aimed at preventive maintenance, reviews of suppliers and components, in-house production and an increase in personnel. At the same time, the full-year plan limits operating profit growth to 2.9% and factors in higher material, labor and subcontracting costs. At the next announcement, we will review the first-half cumulative margin, whether the full-year forecast is maintained or revised, and the extent to which higher costs have been absorbed, to determine whether the first quarter's high margin was a temporary project-related factor or has become established as an operational improvement.