Building Materials, which shifted from higher revenue to lower operating profit, is the key issue for the first half.

Consolidated revenue for the first quarter of the fiscal year ending March 2027 was ¥62,734 million, up 5.4% year on year. Operating profit, however, was ¥443 million, down 1.0%, indicating that revenue growth has not translated into higher operating profit. Ordinary profit increased 3.1% to ¥418 million, but net income attributable to owners of the parent fell 51.3% to ¥147 million. Improvement has therefore not been consistent from the operating level through to bottom-line profit.

By segment, Building Materials generated revenue of ¥49,947 million and operating profit of ¥284 million, down 47.4% year on year. Housing generated revenue of ¥10,728 million and operating profit of ¥491 million, up 44.0%. Other generated revenue of ¥2,058 million and operating profit of ¥185 million, up 78.1%. The year-on-year change in first-quarter operating profit comprised a ¥256 million decline from Building Materials, offset by increases of ¥150 million in Housing, ¥81 million in Other, and ¥20 million from eliminations and corporate expenses.

The full-year forecasts remain unchanged at revenue of ¥270,000 million, operating profit of ¥5,700 million, ordinary profit of ¥5,200 million, and net income attributable to owners of the parent of ¥3,200 million. First-quarter progress was 23.2% for revenue, compared with 7.8% for operating profit, 8.1% for ordinary profit, and 4.6% for net income. While revenue was broadly on track with the passage of 25% of the fiscal year, profit progress was lagging. In the first half, it will be necessary to confirm not only whether revenue is building as expected, but also whether Building Materials' margin is improving.

The key points to confirm in the first half are whether Building Materials' operating profit exceeds the ¥910 million recorded in the same period of the previous year, and whether the decline in gross margin is temporary. The company attributed first-quarter revenue growth to higher selling prices, while citing lower gross margin, freight costs, core-system modification costs, and higher M&A expenses on the profit side. The focus will be whether these costs continue from the second quarter onward and how the company explains the level of profit required in the second half to achieve the full-year forecast of ¥5,700 million.