Q1 revenue surged, but profit progress toward the FY2027 full-year plan remains low

Revenue in the first quarter of the fiscal year ending March 2027 was ¥11,822 million, up 42.5% from ¥8,294 million in the same quarter of the previous year. Operating profit was ¥274 million, turning positive from an operating loss of ¥54 million in the year-earlier quarter. Ordinary profit was ¥459 million and net income attributable to owners of the parent was ¥203 million, with all major profit items in the black. The company explained that the increase in revenue was driven by the recognition of sales from the order backlog and steady maintenance services.

The full-year forecasts remain unchanged at revenue of ¥55,000 million, operating profit of ¥3,800 million, ordinary profit of ¥3,830 million and net income attributable to owners of the parent of ¥2,650 million. First-quarter progress was 21.5% for revenue, 7.2% for operating profit, 12.0% for ordinary profit and 7.7% for net income, indicating slower profit progress than revenue progress. The operating margin implied by revenue of ¥55,000 million is approximately 6.9%, compared with just 2.3% in the first quarter. Accordingly, the first half will require improvements in the cost ratio and segment profitability, not merely revenue growth.

The company’s presentation materials described overall first-quarter progress as being in line with the initial plan. However, the increase in operating profit was not broad-based across the company. A substantial increase in profit in the concrete plant-related business offset an operating loss in the asphalt plant-related business. Therefore, in the first-half results, it will be necessary to examine not only the growth rate of consolidated revenue, but also the extent to which operating profit of ¥274 million has accumulated, as well as the breakdown of gross margin, SG&A expenses and non-operating income and expenses.

The company did not prepare a quarterly consolidated cash flow statement for the first quarter, and did not disclose cash flow from operating activities, cash flow from investing activities, cash flow from financing activities or the period-end balance of cash and cash equivalents. When the order backlog is building, movements in inventories, contract liabilities and trade receivables can create a gap between profit and cash flow. Next time, operating cash flow and changes in working capital in the first half should be reviewed alongside profit progress.