Losses narrowed in the first half, but there is still considerable scope to achieve the full-year profit forecast

Consolidated revenue in FY2026-H1 was ¥23,907 million, down 3.7% year on year. Operating loss, however, narrowed by ¥17 million, from ¥1,062 million in the year-earlier period to ¥1,045 million. Ordinary loss also narrowed from ¥1,260 million to ¥922 million, while the interim net loss attributable to owners of the parent narrowed from ¥1,431 million to ¥984 million, confirming an improvement in earnings despite the decline in revenue. However, operating, ordinary and net income all remained in the red, and the improvement was still limited to narrower losses.

The FY2026 full-year forecast presented when the company announced its FY2025 full-year results was revenue of ¥58,000 million, operating profit of ¥650 million, ordinary profit of ¥630 million and net profit of ¥630 million. Simply deducting the first-half results means that the second half will need to generate revenue of ¥34,093 million, operating profit of ¥1,695 million and net profit of ¥1,614 million. The company generated only 41.2% of its full-year revenue forecast in the first half, implying that 58.8% of full-year revenue will need to be generated in the second half. For operating profit, the company must swing from the ¥1,045 million first-half loss to second-half profit of ¥1,695 million, requiring not only seasonal revenue growth but also improved gross margins and greater absorption of fixed costs.

In FY2026-Q3, the focus should be on which businesses will generate the second-half operating profit of ¥1,695 million, rather than simply whether the deficit has narrowed. If Retail and Trading expand their losses, improvements in Gift and Asset & Services alone may not be enough to support the full-year forecast. Conversely, if the cumulative Q3 operating loss remains within ¥1,045 million, profits from Gift and Asset & Services build, and Retail's loss narrows, the likelihood of achieving the full-year forecast will increase. It will also be necessary to confirm whether the full-year forecast will be maintained or whether revenue, operating profit or net profit will be revised.