Operating profit is ahead in 1Q, but confirmation against first-half seasonality is needed

In 1Q of the fiscal year ending March 2027, operating revenue was ¥78,792 million, up 4.9% year on year, and operating profit was ¥11,936 million, up 7.5%. Ordinary profit was ¥11,096 million and net income attributable to owners of the parent was ¥8,138 million, up 8.4% and 10.6%, respectively. The full-year forecasts are operating revenue of ¥321,300 million, operating profit of ¥37,000 million, ordinary profit of ¥32,700 million and net income of ¥22,100 million, representing 1Q progress rates of 24.5%, 32.3%, 33.9% and 36.8%, respectively. Profit progress exceeding revenue progress indicates that 1Q profitability is ahead of the elapsed-period assumption in the plan.

On the other hand, quarterly results have been volatile. In the fiscal year ended March 2026, operating profit was ¥11,105 million in 1Q, ¥7,877 million in 2Q, ¥11,438 million in 3Q and ¥8,412 million in 4Q. First-half results for the same period last year were operating revenue of ¥144,907 million and operating profit of ¥18,982 million. On a simple comparison, 1Q operating profit alone this year was equivalent to approximately 62.9% of last year's first-half operating profit, but this cannot be extrapolated directly to the likelihood of achieving the full-year plan. The level of standalone 2Q profit and the first-half earnings mix, including seasonality in real estate sales and hotels, will be important.

The company has not revised its full-year forecasts. Its 1Q results presentation did not disclose progress rates against the full-year forecasts, the revenue and profit required during the remaining period, or the assumptions underlying the earnings forecasts. Fifty percent of the full-year operating revenue forecast is ¥160,650 million, and 50% of the operating profit forecast is ¥18,500 million. Based on 1Q results, a simple calculation implies that 2Q alone would need to generate operating revenue of ¥81,858 million and operating profit of ¥6,564 million. However, these are not first-half targets set by the company, but benchmarks for analysis assuming even progress.

At the next first-half results announcement, it will be important to see whether the company discloses 2Q cumulative operating revenue, operating profit and net income, their year-on-year changes, and actual progress rates against the full-year forecasts. A key question is whether the company will maintain its full-year forecasts despite exceeding first-half operating profit of ¥18,982 million last year, or maintain them because of higher costs expected in the second half. As of 1Q, revenue was below plan while operating profit was above plan, with performance differing by segment. The company therefore needs to explain not only the consolidated figures but also which businesses supported first-half profit progress.