Whether the pattern of rising revenue but shrinking margins will reverse in FY2027-H1

FY2027-Q1 revenue was ¥1,970 million, operating profit was ¥27 million, ordinary profit was ¥37 million, and net income attributable to owners of the parent was ¥13 million. Revenue increased 3.5% year on year, but operating profit fell 10.4% and net income fell 19.2%, showing revenue expansion and profit moving in opposite directions. The operating margin calculated from revenue of ¥1,902 million and operating profit of ¥31 million in the year-earlier period declined from approximately 1.63% to approximately 1.41% in the current quarter.

The company attributed the margin decline to higher personnel expenses resulting from a review of bonus criteria and higher administrative expenses. In FY2026 as a whole, revenue increased 3.7% year on year to ¥7,825 million, but operating profit fell 4.7% to ¥137 million, and the operating margin declined from approximately 1.9% to approximately 1.8%. Accordingly, in FY2027-H1, the important issue is not simply whether revenue exceeds the year-earlier level, but how much the increase in gross profit from price pass-through and product mix absorbed increases in fixed and semi-fixed SG&A expenses.

FY2026-H1, the comparative period, recorded revenue of ¥3,884 million, operating profit of ¥80 million, ordinary profit of ¥93 million, and net income of ¥42 million. In the interim results, we will confirm whether both revenue and operating profit have increased from these levels and whether the operating margin exceeds the year-earlier level. Unless changes by expense category, including bonuses, administrative expenses, core-system-related expenses, and personnel expenses, are disclosed, it will be difficult to determine whether the pattern of rising revenue and declining profit is recurring or temporary.

The company previously set an operating margin of 1.5% and an ordinary profit margin of 2.0% as management metrics, but subsequently stopped restating these figures and instead referred to improving profitability and ROE. Accordingly, 1.5% should not be treated as the current formal full-year guidance, but it remains useful as a historical benchmark for measuring profitability in FY2027-H1. Key points to confirm are whether the interim operating margin exceeds 1.5% and, if it falls short, whether the company specifically explains the roles of price pass-through, product mix, and SG&A expenses.