1Q profit growth is a strong start, but profits need to build in H1 to meet the full-year forecast

In 1Q of the fiscal year ending March 2027, revenue was ¥16,865 million and operating profit was ¥344 million, representing year-on-year increases of 5.4% and 67.4%, respectively. The full-year forecast is ¥77,000 million in revenue and ¥4,100 million in operating profit, putting progress at 21.9% for revenue and 8.4% for operating profit as of 1Q. Revenue was approximately 3.1 percentage points below the 25% mark expected after one quarter of the year, while progress in operating profit was even lower.

For the H1 review, if 50% of the full-year forecast is used as a mechanical progress benchmark, revenue of ¥38,500 million and operating profit of ¥2,050 million provide one basis for comparison. After deducting the 1Q results, standalone 2Q revenue of ¥21,635 million and operating profit of ¥1,706 million will be required. These figures are not the company’s published half-year forecasts, but simple arithmetic checkpoints against the full-year plan, so they need to be assessed in light of seasonality and the timing of project recognition.

The factors cited for the 1Q profit increase were the solid performance of the visualization and hands-on management support business operated by Kigyo Doctor, growth in areas such as electricity services, and a ¥419 million increase in gross profit. At the same time, headcount expansion related to the growth strategy and information-processing expenses increased, while selling, general and administrative expenses rose by ¥280 million. It will be necessary to determine whether the structure in which operating profit was supported by controls on other expenses continues in 2Q, or whether increases in personnel and information-processing expenses again put pressure on margins.

There was no revision to the full-year earnings forecast as of 1Q, and no supplementary earnings presentation was prepared. Accordingly, the service-by-service revenue plan underlying the full-year forecast, the order backlog, and the quarterly allocation of profit cannot be confirmed at this stage. In FY2027-H1, the issue will be not only whether the forecast is maintained, but also whether the company discloses the extent of the surplus or shortfall in H1 results against the full-year plan, including changes in gross profit and selling, general and administrative expenses.