Full-year forecast unchanged; profit progress needs to be reconfirmed in the first half

Operating revenue for the first quarter of the fiscal year ending February 2027 was ¥2.941981 trillion, operating profit was ¥75.203 billion, ordinary profit was ¥63.582 billion, and quarterly net income attributable to owners of the parent was ¥13.809 billion. Year on year, operating revenue increased 14.6%, operating profit 33.6% and ordinary profit 32.3%, securing profitability at the operating, ordinary and net income levels.

The full-year forecasts are operating revenue of ¥12 trillion, operating profit of ¥340 billion, ordinary profit of ¥290 billion and profit attributable to owners of the parent of ¥73 billion. First-quarter progress against these forecasts was 24.5%, 22.1%, 21.9% and 18.9%, respectively. Operating revenue was close to the 25% calendar-year benchmark, while operating profit and ordinary profit were slightly below it, and net income was lower still. Rather than judging full-year progress from first-quarter results alone, it is necessary to determine whether profit is weighted toward the second half and whether profit accumulation accelerates in the second quarter.

If cumulative first-half results reach 50% of the full-year forecasts, the arithmetic benchmarks are operating revenue of ¥6 trillion, operating profit of ¥170 billion, ordinary profit of ¥145 billion and profit attributable to owners of the parent of ¥36.5 billion. A simple calculation based on first-quarter results indicates that the standalone second quarter would need to generate operating revenue of ¥305.8019 billion, operating profit of ¥94.797 billion, ordinary profit of ¥81.418 billion and net income of ¥22.691 billion. These are not the company's quarterly targets, but reference points for measuring the distance from the full-year forecasts at the next results announcement.

As of the first quarter, there were no changes to the earnings forecast or annual dividend forecast. The annual dividend is ¥15 on a post-stock-split basis. Although operating profit was strong, increasing 33.6% year on year, neither the full-year forecast nor the dividend policy was revised upward. The focus at the next results announcement will therefore be whether the outperformance is temporary or sustainable into the second half.

Particular attention is warranted because net income progress was lower than operating profit progress. In the previous fiscal year, non-operating and extraordinary income and expenses had a significant impact, including a gain on step acquisition associated with the conversion of Tsuruha Holdings into a consolidated subsidiary. At the next results announcement, it will be necessary to assess how much of the increase in operating profit converted into bottom-line profit, including extraordinary items and the tax burden.