Can the FY2027-Q1 revenue decline and wider operating loss be reversed in H1?

FY2027-Q1 revenue was ¥1,079 million, down 8.7% from ¥1,181 million in the same period of the previous year. The operating result deteriorated from an operating loss of ¥142 million in the same period of the previous year to an operating loss of ¥304 million. The ordinary loss was ¥327 million, and the quarterly net loss attributable to owners of the parent was ¥369 million. The operating margin was approximately negative 28.2%, a significant decline from approximately negative 12.0% in the same period of the previous year.

The full-year forecasts remain unchanged at revenue of ¥6,300 million, operating income of ¥190 million, ordinary income of ¥118 million and net income attributable to owners of the parent of ¥100 million. Q1 revenue was only 17.1% of the full-year forecast, while the operating result was a ¥304 million loss against the full-year forecast of a profit, making this a difficult start based on simple progress ratios. However, the company cited steady orders for small and medium-sized projects, in line with the initial plan, as the reason for maintaining its full-year forecasts. This appears to reflect the company's seasonality, with revenue and profit weighted toward the second half.

FY2026-H1 revenue was ¥2,276 million, so the first point to confirm is whether FY2027-H1 can exceed this level. The ¥3,150 million equivalent to half of the full-year forecast is only a mechanical benchmark, and given the business's second-half weighting, falling short of it alone does not necessarily imply a downward revision to the full-year forecast. However, if revenue does not build in Q2 and the H1 operating loss widens beyond the ¥304 million recorded in Q1, the recovery required in H2 to achieve the ¥190 million full-year operating income forecast will become more substantial.

At the next results announcement, the company's view of the full-year forecasts will be important, in addition to H1 revenue and the operating result. Q1 disclosed no figures for orders received or order backlog, and no cash flow from operating activities, supplementary results presentation or earnings briefing was provided. In H1, it will be necessary to check whether the company can disclose order values, the timing of revenue recognition for projects and the factors behind the reduction in losses by segment. The annual dividend forecast remains unchanged at ¥6, and it will also be necessary to assess whether this policy can be maintained while the company continues to report losses.