Full-year target remains dependent on second-half revenue recognition, following lower revenue and earnings in the first half

Revenue for the first half of FY2026 was ¥15,112 million, down 3.9% year on year, while operating profit was ¥616 million, down 48.0%. Ordinary profit was ¥704 million and net income attributable to owners of the parent was ¥455 million, down 39.0% and 40.2%, respectively, year on year. Operating profit declined more sharply than revenue, and as of the first half there was no evidence of profit recovery driven by revenue growth.

The company nevertheless maintained its full-year forecasts at ¥37,000 million in revenue, ¥2,350 million in operating profit, ¥2,350 million in ordinary profit and ¥1,600 million in net income. Simple progress rates were 40.8% for revenue, 26.2% for operating profit and 28.4% for net income. To reach the full-year plan after the first-half results, the second half would need to generate ¥21,888 million in revenue, ¥1,734 million in operating profit and ¥1,145 million in net income. In particular, operating profit would need to be approximately 2.8 times the first-half result in the second half, requiring projects to be completed with a recovery in profitability.

At the earnings briefing, the company attributed the revenue decline to the反動 from a large project being recognized as revenue in the same period of the previous year and to revenue recognition being pushed into the second half because of changes to the progress schedule. Higher personnel and construction costs associated with increased staffing also weighed on profit. Accordingly, in the third quarter it will be necessary to distinguish between whether revenue has simply recovered, whether projects pushed into the second half have actually been recognized as revenue, and whether sufficient gross profit has been secured to absorb the additional personnel costs.

This disclosure did not provide standalone profit and loss figures for the three months of the second quarter, progress rates against the full-year forecast, a monetary bridge by factor behind the earnings decline, or segment profit. In the third quarter, we will assess not only nine-month cumulative revenue and operating profit, but also the amount remaining to achieve the full-year forecast, the timing of revenue recognition for major projects, and whether the assumptions underlying the full-year forecast have changed.