Revenue growth has yet to translate into earnings growth, making recovery in the operating margin the focus for the first half.

Revenue in the first quarter of the fiscal year ending February 2027 was ¥138,982 million, up 10.6% from ¥125,642 million in the same quarter of the previous year. However, operating profit was ¥8,486 million, down 19.2% from ¥10,503 million in the same quarter of the previous year. The operating margin on revenue fell 2.25 percentage points, from approximately 8.36% to approximately 6.11%. The central issue in these results is that higher revenue has not translated directly into earnings growth.

The full-year forecasts are revenue of ¥580,000 million and operating profit of ¥60,000 million. Progress in 1Q was approximately 24.0% for revenue, compared with approximately 14.1% for operating profit. Although the full-year forecast cannot simply be assumed to progress evenly by quarter or half-year, using ¥290,000 million of revenue and ¥30,000 million of operating profit as reference benchmarks for the first half means that, based on 1Q results, 2Q alone would need to generate revenue of ¥151,018 million and operating profit of ¥21,514 million. In particular, the key point on earnings will be how much of the low 1Q progress can be recovered in 2Q.

The operating margin calculated from the full-year revenue forecast of ¥580,000 million and operating profit forecast of ¥60,000 million is approximately 10.34%, about 1.6 percentage points above the 8.7% recorded in the fiscal year ended February 2026. Accordingly, the first-half results will need to be reviewed not only for the amount of operating profit, but also for whether the downward pressure from indirect costs, the core systems migration and business restructuring costs in Europe has eased, and whether higher revenue from semiconductor and data center-related businesses has led to improved margins, together with the amounts attributable to each factor.