FY2027 1Q saw a sharp decline in revenue and profit; even with the full-year forecast maintained, revenue progress is behind schedule

In FY2027 1Q, revenue was ¥7,006 million, operating profit was ¥1,296 million, ordinary profit was ¥1,325 million and net profit attributable to owners of the parent was ¥876 million. In the prior-year period, revenue was ¥9,451 million, operating profit ¥2,196 million, ordinary profit ¥2,304 million and net profit ¥1,538 million. Revenue declined 25.8%, operating profit 40.9%, ordinary profit 42.5% and net profit 42.9%. The decline in operating profit exceeded the decline in revenue by 15.1 percentage points, making it necessary to examine not only the reversal in revenue scale but also the extent of the profit decline.

The company explained that the main factor was the absence in the current quarter of the sale of an office building, or one property held for sale, in the non-asset business that had occurred in the prior-year period. The decline in revenue and profit may therefore have been significantly affected by the presence or absence of a one-time sale, but the impact of not making the sale, recurring rental revenue, asset management-related fee revenue and the decline in airport business revenue have not been broken down by amount. In FY2027-H1, an explanation allowing the underlying earnings power excluding sale transactions to be assessed will be necessary.

The full-year forecast is revenue of ¥39,300 million, operating profit of ¥4,900 million, ordinary profit of ¥4,900 million and net profit of ¥3,400 million, with no revision as of 1Q. Progress was 17.8% for revenue, 26.4% for operating profit, 27.0% for ordinary profit and 25.8% for net profit. Operating profit and net profit were close to the simple quarterly allocation, while revenue was 7.2 percentage points below the 25% elapsed-period benchmark. Securing first-half revenue of ¥19,650 million, operating profit of ¥2,450 million and net profit of ¥1,700 million will be the minimum benchmark for assessing the appropriateness of the maintained full-year forecast.

At the next results announcement, we want to separately confirm the number, value and profit from sales of real estate held for sale, recurring rental revenue, the impact of contract expiries for airport real estate, and the impact of lower heat supply and water supply volumes. The first quarter did not disclose operating cash flow or ongoing business KPIs, and no supplementary results briefing materials or earnings presentation was held. How extensively the company expands quantitative disclosure by factor in the first half will therefore also be important.