Revenue growth but an ordinary loss: first-half focus on operating profit quality and interest burden

In the first quarter from April to June 2026, revenue was ¥1,513 million and operating profit was ¥577 million, up 25.3% and 16.2% year on year, respectively. The acquisition of income-producing real estate boosted revenue, securing higher revenue and operating profit. However, the company posted an ordinary loss of ¥107 million and a quarterly net loss attributable to owners of the parent of ¥94 million, with no improvement in below-operating profit after including non-operating expenses.

The full-year forecast remains unchanged as of the first quarter, at revenue of ¥16,361 million, operating profit of ¥4,645 million, ordinary profit of ¥1,706 million and net income attributable to owners of the parent of ¥1,062 million. Progress was approximately 9.2% for revenue and 12.4% for operating profit, below a simple one-quarter benchmark. However, because the business structure includes real estate sales and M&A revenue being recorded in specific periods, the next earnings announcement will need to assess not only simple seasonal progress but also how much earnings were generated in the first half.

The operating margin in the first quarter was approximately 38.2%, down approximately 3.0 percentage points from approximately 41.2% in the same period of the previous year. Since the margin declined despite higher revenue, it will be important to determine whether the increase in revenue from acquiring rental properties is sufficiently absorbing higher depreciation and finance costs. The company did not prepare a quarterly consolidated cash flow statement for the first quarter, and actual operating, investing and financing cash flows were also not disclosed.

At the next earnings announcement for the first half of the fiscal year ending March 2027, we will look for cumulative progress in revenue and operating profit, whether ordinary profit has turned positive and whether the operating margin has recovered. In particular, specific details will be needed to determine whether maintaining the full-year forecast reflects actual conditions and whether it assumes revenue recognition from real estate sales and the energy business in the second half. The scheduled earnings announcement date is 13 November 2026.