Can the return to profitability in the first quarter be sustained through the first half?

In the first quarter from April to June 2026, revenue was ¥706.172 million, operating profit was ¥33.906 million, ordinary profit was ¥32.013 million and quarterly net profit attributable to owners of the parent was ¥21.734 million. In the same period of the previous year, revenue was ¥522.002 million, operating loss was ¥60.117 million and quarterly net loss attributable to owners of the parent was ¥92.714 million. Revenue therefore increased 35.3%, while operating profit and loss improved by approximately ¥94 million. The operating margin also rose from approximately negative 11.5% in the same period of the previous year to approximately 4.8%.

The full-year revenue forecast is ¥6,300 million, putting first-quarter progress at only 11.2% based on ¥706.172 million ÷ ¥6,300 million. This is 13.8 percentage points below the 25% implied by a simple even quarterly run rate. Starting from the first-quarter result, achieving the full-year forecast would require ¥5,593.828 million over the remaining 3 quarters, or approximately ¥1,864.6 million per quarter, requiring a revenue run rate approximately 2.6 times that of the first quarter. However, the results of the 4 newly consolidated companies are not included in the first-quarter income statement, so it is premature to conclude that the full-year target will be missed based solely on this progress rate.

In the fiscal year ended March 2026, revenue was ¥2,133.609 million and operating loss was ¥171.192 million. The current ¥6,300 million forecast therefore assumes a substantial expansion of approximately 195% from the previous year's actual revenue. It will be necessary to determine from the cumulative first-half operating margin and standalone second-quarter earnings whether the first-quarter return to profitability resulted from improved profitability in the existing businesses or from the timing of project execution and the reversal of temporary cost burdens.

At the next results announcement, it will be important to see whether the company can disclose full-year forecasts not only for first-half revenue but also for operating profit, ordinary profit, net profit and earnings per share. At present, full-year forecasts other than revenue, orders received and order backlog, and the breakdown between unit prices and volumes have not been disclosed, so it is not possible to verify quantitatively whether first-half revenue growth reflects the conversion of the order backlog or the accumulation of new projects. As a short-term benchmark, we will look for standalone second-quarter revenue to exceed the ¥570 million recorded in the same period of the previous year while maintaining the approximately 4.8% operating margin recorded in the first quarter.