The key checkpoint is first-half profit progress against the full-year plan

Revenue in the first quarter of the fiscal year ending March 2027 was ¥15,008 million, up 3.5% year on year, while operating profit was ¥137 million, up 116.5%. Ordinary profit was ¥268 million and net profit attributable to owners of the parent was ¥127 million, with profit at each stage remaining positive. The full-year forecasts are revenue of ¥68,000 million, operating profit of ¥1,650 million, ordinary profit of ¥1,800 million and net profit of ¥1,150 million. First-quarter progress was therefore only approximately 22.1% for revenue and 8.3% for operating profit.

Using a mechanical benchmark that places the first half at a simple 50% of the full-year plan, the benchmarks are revenue of ¥34,000 million and operating profit of ¥825 million. Working back from the first-quarter results, standalone second-quarter revenue of ¥18,992 million and operating profit of ¥688 million would be required. This is merely an arithmetic benchmark for measuring progress at the half-year point, rather than the company’s plan after taking seasonality into account. Nevertheless, operating profit in particular would need to increase substantially from the first-quarter level of ¥137 million.

The company cited increased public investment, higher orders related to housing equipment, stronger relationships with existing customers, cost reductions, reinforcement of its construction capabilities and the development of new customers as factors behind the first-quarter improvement. However, the contribution of each factor, order intake and order backlog have not been disclosed. Since revenue progress is outpacing operating profit progress, achieving the first-half profit plan will require not only higher revenue but also improvements in the gross margin and the ratio of selling, general and administrative expenses to revenue.

The full-year earnings forecast had not changed from the latest published figures as of the first quarter. In FY2027-H1, it will be necessary to check not only actual results against the simple 50% benchmark, but also whether the full-year forecast is maintained or revised, and whether the increase in operating profit reflects improved profitability in construction materials or a reduction in losses from construction work.