Can the high earnings progress be maintained through the first half?

In Q1 of FY2027, net sales were ¥40,236 million and operating profit was ¥5,683 million, up 27.8% and 88.0%, respectively, year on year. Operating profit expanded faster than net sales, with the simple operating margin rising to 14.1% from approximately 9.6% a year earlier, an increase of approximately 4.5 percentage points. Growth in the core real estate development and construction businesses drove the increase in group-wide earnings.

Progress against the full-year forecasts was 26.5% for net sales, calculated as ¥40,236 million ÷ ¥152,000 million, and 37.9% for operating profit, calculated as ¥5,683 million ÷ ¥15,000 million. As Q1 represents 25% of the fiscal year, net sales were broadly in line with the elapsed period, while operating profit exceeded the period-based rate by 12.9 percentage points. However, the company has not disclosed standalone first-half forecasts for net sales and operating profit, so it is not yet possible to determine whether the concentration of profit in the first half reflects seasonality or improvements in selling prices and project mix.

The comparable first half of FY2026 generated net sales of ¥63,404 million and operating profit of ¥5,420 million. While operating profit for Q1 of FY2027 alone increased from ¥3,022 million in the year-earlier period to ¥5,683 million, at least ¥23,168 million in net sales will be required in Q2 to exceed the prior-year first-half figure for the first half as a whole, and maintaining the margin will be necessary even to exceed the prior-year first-half operating profit on a simple basis. It is also worth noting that, after Q1, ¥111,764 million in net sales and ¥9,317 million in operating profit remain to be generated to meet the full-year forecasts.

At the next results announcement, we will assess not only the interim results, but also the company’s assessment of progress against the full-year forecasts, whether the earnings forecasts have been revised, and changes in the operating margin. In particular, if the operating margin falls significantly from 14.1% even as net sales increase year on year, the Q1 improvement in profitability may have depended on the timing of sales or product mix. Conversely, if both net sales and operating profit exceed the FY2026 first-half figures of ¥63,404 million and ¥5,420 million, respectively, and the full-year forecasts are maintained, this would support the current high progress rates.