From sharp Q1 profit growth to preliminary H1 profit decline; reversal in trading gains is the focus

In FY2027 Q1, operating revenue was ¥2,899 million, operating profit was ¥1,524 million, ordinary profit was ¥1,877 million and quarterly net profit attributable to owners of the parent was ¥1,528 million. Operating revenue rose 64.5% year on year and operating profit rose 217.8%, expanding sharply from ¥479 million in the year-earlier quarter. The operating margin calculated from operating revenue and operating profit was approximately 52.6%, up approximately 25.4 percentage points from approximately 27.2% in the year-earlier quarter.

Preliminary FY2027 H1 results announced on 15 October showed interim net profit attributable to owners of the parent of ¥1,911 million, down 22% year on year. The preliminary release cited lower trading gains and losses as the main factor, so the Q1 profit growth rate cannot simply be annualized. In the formal financial results summary, the interim net profit preliminary figure should be confirmed together with finalized operating revenue, operating profit, ordinary profit and profit after tax.

Q1 profit growth reflected a combination of a rising equity market, higher commissions from increased sales of beneficiary certificates, higher investment trust fees and higher trading gains and losses on bonds and other instruments. The interim results should therefore confirm whether the strong performance from April to June continued from July to September, or whether a reversal in trading gains and losses on bonds and other instruments outweighed the Q1 profit growth effect.

The company has not disclosed a full-year earnings forecast because of securities-market volatility, so progress against a full-year forecast cannot be calculated mechanically for FY2027 H1. The next disclosure should at least provide year-on-year changes in each interim profit item, a breakdown of commissions received, trading gains and losses, and financial income and expenses, as well as whether there were special gains. These details will help determine whether the decline in the H1 preliminary results was temporary.