Can the decline in Q1 operating profit be absorbed by the full-year plan for operating profit growth?

FY2027-Q1 revenue was ¥39,018 million, down 0.1% year on year. Operating profit was ¥2,241 million, down 18.2%, ordinary profit was ¥2,660 million, down 12.2%, and net income attributable to owners of the parent was ¥819 million, down 39.4%. The operating margin fell by approximately 1.3 percentage points, from approximately 7.0% in the prior-year quarter to approximately 5.7%. Despite maintaining revenue scale, profit declined substantially, making this the starting point for verification in FY2027-H1.

The company's FY2027 full-year plan calls for revenue of ¥184,000 million, operating profit of ¥24,000 million, ordinary profit of ¥25,600 million and net income of ¥17,600 million. Revenue is expected to rise 4.3% year on year and operating profit 6.4%, while net income is planned to decline 12.6%. Q1 operating profit of ¥2,241 million represents 9.3% of the full-year plan and, on a simple progress basis, is well below the prior-year Q1 operating profit of ¥9,686 million. Whether project revenue recognition and margins recover in H1 will therefore determine the likelihood of achieving the plan.

The company cited a lull in systems investment following the end of Windows 10 support, slower-than-expected expansion of new products, the timing of revenue recognition for environmental systems and extensions of certain North American projects as factors behind the decline in profit. Domestic contracted parking management services, employment management cloud services, and the European and Korean businesses grew. H1 therefore needs to distinguish between demand loss and a shift in project timing using segment revenue and profit and project progress.

In FY2026, operating profit was ¥22,551 million and net income was ¥20,146 million. Gains on the sale of investment securities of ¥1,853 million and the recognition of deferred tax assets following improved performance at US group companies boosted net income. In FY2027-Q1, extraordinary income consisted of a ¥2 million gain on the sale of fixed assets and extraordinary losses of ¥70 million on the disposal of fixed assets, with no large extraordinary gain like that recorded in the prior year. At the next H1 update, we will track whether operating profit approaches the prior-year H1 figure of ¥9,686 million and whether recovery toward full-year operating profit of ¥24,000 million is confirmed without relying on extraordinary items.