Can the seasonality absorb the low first-quarter progress?

First-quarter revenue was ¥10,027 million, representing 6.9% progress against the full-year plan of ¥145,000 million. Operating profit was only ¥588 million, equivalent to 2.2% progress against the full-year plan of ¥26,500 million. On a simple one-quarter-of-the-year basis, these are low levels, and achieving the full-year targets will require an additional ¥134,973 million in revenue and ¥25,912 million in operating profit from Q2 onward.

However, the company does not consider this low progress to indicate an immediate shortfall against its plan. It explained that deliveries of condominium units are concentrated in Q3, while sales of major income-producing properties are scheduled to proceed in stages from Q2 onward. First-quarter revenue from the housing development business was ¥4,180 million and revenue from the real estate development business was ¥812 million. The fact that these two businesses, whose results are particularly sensitive to the timing of sales and handovers, were below the prior-year period directly contributed to the low consolidated progress.

At the H1 results stage, the company’s explanation that performance is “in line with plan” must be tested against actual project results. The company handed over 49 units in Q1, leaving 861 units against the full-year plan of 910 units. For income-producing real estate, the company has explained when sales are expected to take place, from Q2 onward, but has not disclosed the sales amount, number of properties, contribution to profit or amount remaining against the full-year plan. Which projects were actually recognized as revenue in Q2 will be important.

The earnings presentation also describes progress against the full-year forecast as “in line with expectations,” but provides no bridge showing, on a monetary basis, the impact of delayed handovers or property sales. In FY2027-H1, it will be necessary to assess not only cumulative revenue and operating profit progress, but also condominium handovers, income-producing real estate sales and the recovery in segment profit, to determine whether the weak first quarter falls within the planned seasonal pattern or includes project delays.