The focus for FY2027-H1 is turning operating profit positive, rather than continuing revenue growth

Revenue in 1Q of the fiscal year ending March 2027 was ¥141,745 million, up 13.0% from ¥125,441 million in the prior-year period. Operating profit or loss improved by ¥1,648 million, from a loss of ¥4,055 million in the prior-year period to a loss of ¥2,407 million, while ordinary profit or loss was a loss of ¥2,915 million. On the other hand, profit attributable to owners of the parent was positive at ¥94 million, but this included a ¥4,477 million gain on the sale of investment securities, rather than reflecting operating improvement alone.

The company continues to disclose the seasonality of its business, with construction completions and revenue concentrated at the end of the fiscal year, so the full-year plan cannot be assessed based on the 1Q loss alone. In fact, the FY2026-H1 operating loss was ¥7,781 million, yet the company secured operating profit of ¥12,192 million for FY2026 as a whole. The FY2027 full-year operating profit forecast is ¥25,500 million, representing an expected ¥13,308 million increase from FY2026 actual results. In FY2027-H1, the key points will be the extent of improvement from the prior-year operating loss, even after taking seasonality into account, and how the company explains the profit required in the second half.

1Q segment revenue was ¥121,394 million for Environment, ¥13,086 million for Machinery & Infrastructure, ¥6,282 million for Decarbonization, and ¥981 million for Other. However, segment profit or loss was a loss of ¥545 million for Environment, ¥834 million for Machinery & Infrastructure, ¥826 million for Decarbonization, and ¥219 million for Other, leaving every segment in the red. In particular, although higher revenue in the Environment segment lifted consolidated revenue, the segment has not yet returned to profitability.

The 1Q summary report did not disclose details of revenue by region, operating cash flow, or the order backlog. In FY2027-H1, it will be necessary to examine cumulative revenue and profit or loss across the 4 segments, the profitability of overseas projects in the Environment segment, the impact of problems in Machinery & Infrastructure, and the reduction in losses in Decarbonization. If all segments remain loss-making despite continued revenue growth, the likelihood of the second-half recovery underpinning the full-year operating profit forecast of ¥25,500 million should be assessed cautiously.