Is the first-quarter decline in revenue and profit simply a matter of property-sale timing, with the full-year plan on track?

For the first quarter of the fiscal year ending March 2027, consolidated revenue was ¥11,021 million, operating profit was ¥2,787 million, ordinary profit was ¥2,372 million, and net profit attributable to owners of the parent was ¥1,618 million. These figures declined 16.0%, 18.9%, 23.8% and 28.3%, respectively, from the prior-year period. Progress against the full-year forecasts was 17.3% for revenue, 17.6% for operating profit, 18.2% for ordinary profit and 14.1% for net profit, below the simple quarterly elapsed-period benchmark of 25%. Net profit in particular was progressing slowly, making profit recognition in H1 important.

The main reason for the decline in revenue and profit was the decrease in property sales in the Building Business. Revenue from the business was ¥10,156 million and operating profit was ¥2,897 million, down 18.2% and 20.8%, respectively, year on year. Property-sale revenue was ¥1,823 million, down 62.2%, while property-sale gains were ¥124 million, down 88.3%. By contrast, rental revenue was ¥7,908 million, up 11.9%, and hotel revenue was ¥1,445 million, up 84.6%, with recurring revenue from owned and operated assets partially offsetting the decline in sale proceeds.

The company says property sales are expected to be approximately 95% complete on a contract basis and are progressing as planned. It also expects to record approximately ¥2,000 million in property-sale gains in Q2. Accordingly, in FY2027-H1 it will be necessary to check not only the progress of sale contracts, but also the actual handover timing, recognized revenue and amount of sale gains. Even if contracts have been signed, a delay in handover or accounting recognition into the second half could make the H1 figures appear weak while leaving uncertainty over the achievability of the full-year plan.

The full-year forecasts are revenue of ¥63,800 million, operating profit of ¥15,800 million, ordinary profit of ¥13,000 million and net profit of ¥11,500 million. They had not been revised as of the end of Q1. Against FY2026 operating profit of ¥15,109 million, the FY2027 forecast represents growth of only 4.6%, so the plan does not assume significant profit growth. In the H1 results, the main points to confirm will be whether property-sale revenue and gains have accumulated as described by the company, whether the full-year forecasts are maintained, and whether additional explanations are provided regarding sale timing and margins.