The Solutions business will determine whether the FY2026 full-year forecast is achieved

For the cumulative third quarter of FY2026, consolidated revenue was ¥12,094 million, up 9.1% year on year, while operating profit was ¥1,158 million, up 19.0%. The full-year forecast is ¥16,902 million in revenue and ¥1,365 million in operating profit, implying progress of 71.6% for revenue and 84.8% for operating profit on a simple calculation. At the end of the third quarter, revenue was approximately 3.4 percentage points below the 75% elapsed-quarter benchmark, while operating profit was well ahead.

The shortfall versus the full-year forecast was ¥4,808 million for revenue and ¥207 million for operating profit. Dividing these amounts by the fourth-quarter requirement implies an operating margin of approximately 4.3% for the remaining period needed to achieve the forecast. As this is below the approximately 9.6% operating margin for the cumulative third quarter, it is necessary to assess whether achievement of the forecast will depend not only on simple profit growth but also on the timing of revenue recognition at year-end, project mix and the timing of SG&A expenses.

The core Solutions business generated cumulative third-quarter revenue of ¥11,316 million and segment profit of ¥1,165 million, up 12.6% and 32.2%, respectively, year on year. Increased orders for engineer staffing, contract manufacturing and IT services drove the overall performance, with strong demand for personnel and higher project margins cited as factors behind the profit increase. At the interim period, staffing rates were up 4.4% year on year, the number of engineers on staff was 2,105 and the utilization rate was 96.9%, although this was down from 98.1% a year earlier.

At the next earnings release, we will assess which projects and business areas generated fourth-quarter revenue and profit in the Solutions business. In addition to whether staffing rates continue to rise, whether growth in the number of engineers on staff translates into more engineers deployed and whether the lower utilization rate is temporary, the key points for assessing achievement of the full-year forecast and next year's margins will include whether personnel and outsourcing costs associated with opening the Fukuoka office and using business partners again outpace growth in gross profit.