Revenue increased, but margins have not recovered, making a recovery from the first half onward necessary to achieve the full-year target.

FY2027-Q1 consolidated revenue was ¥3,430 million, up 2.4% year on year, while operating profit was ¥162 million, ordinary profit was ¥194 million, and net profit attributable to owners of the parent was ¥107 million, down 36.6%, 33.4% and 34.4%, respectively, from the year-earlier period. The operating margin declined by approximately 2.9 percentage points, from approximately 7.6% in the year-earlier period to approximately 4.7%, indicating that higher revenue has not translated into higher profit.

The full-year forecasts are revenue of ¥14,600 million, operating profit of ¥1,140 million, ordinary profit of ¥1,320 million and net profit of ¥790 million. The progress rates as of Q1 are approximately 23.5%, 14.2%, 14.7% and 13.5%, respectively. Revenue is close to the 25% proportion of the fiscal year elapsed, while progress in operating profit and net profit is low. Simply subtracting Q1 results from the full-year forecasts leaves ¥11,170 million of revenue, ¥978 million of operating profit, approximately ¥1,126 million of ordinary profit and ¥683 million of net profit to be generated over the remaining 3 quarters. However, seasonality in weddings and funerals has not been disclosed, so it is too early to conclude that the targets will be missed based solely on an even quarterly allocation.

The decline in margins reflects differing trends among the segments. The hotel business posted higher revenue and profit, but operating profit in the ceremonies business was ¥401 million, down 19.2% year on year, while operating profit in the nursing care business was ¥22 million, down 13.6%. The company has identified higher personnel expenses associated with improved employee treatment and new funeral hall opening costs as factors reducing full-year profit. In Q1, costs for new day-service facilities in the nursing care business and lower case volumes in the ceremonies business also put pressure on profit.

In FY2027-H1, we will look at whether cumulative Q2 consolidated operating profit exceeds the ¥512 million recorded in the year-earlier period and how far the operating margin recovers from 4.7%. The Q1 summary financial results did not break down the effects of personnel expenses, opening costs and higher prices by amount, and it is also unclear how much of the increase in revenue absorbed the higher costs. If the full-year forecast is maintained, concrete signs of margin improvement in Q2 and progress in cost management toward the second half will be necessary.