Revenue up in Q1 but operating profit down, with profit growth concentrated in one segment

Operating revenue in Q1 of the fiscal year ending March 2027 was ¥273.467 billion, up 4.6% year on year. Operating profit was ¥31.394 billion, down 2.8%, while ordinary profit was ¥33.369 billion, down 6.2%. Net income attributable to owners of the parent was ¥36.260 billion, up 43.4%, but this does not directly indicate an improvement in profitability at the operating level. Operating margin was approximately 11.5%, down approximately 0.9 percentage points from approximately 12.4% in the same quarter of the previous year.

Q1 represented approximately 24.0% of the full-year operating revenue forecast of ¥1.140 trillion and approximately 28.5% of the operating profit forecast of ¥110.000 billion. Since operating profit is running ahead of revenue, the company is not materially behind its full-year plan on the surface. However, railway, hotel and real estate earnings are affected by seasonality and the timing of property handovers, so it is too early to judge full-year performance based on Q1 progress alone. The next update will need to confirm whether the gap between revenue and operating profit progress is maintained on a first-half cumulative basis.

By segment, the transportation business reported operating revenue of ¥56.141 billion and operating profit of ¥9.995 billion, up 4.0% and 1.1%, respectively, year on year. The real estate business was the strongest, with operating revenue of ¥60.051 billion and operating profit of ¥15.154 billion, up 17.2% and 13.2%, respectively. Operating revenue in the lifestyle services business was ¥122.422 billion, up only 0.2%, while operating profit fell 33.9% to ¥3.407 billion. The hotel and resort business reported operating revenue of ¥34.852 billion, up 2.8%, but operating profit fell 13.8% to ¥3.331 billion.

The Q1 financial summary provides segment results but does not break down the decline in operating profit by factors such as personnel expenses, repair costs, electricity procurement costs and rental expenses. Operating cash flow for Q1 was also not disclosed. In FY2027-H1, the key points to verify will be whether operating profit returns to year-on-year growth, whether combined profit from the lifestyle services and hotel businesses recovers at least from Q1's ¥6.738 billion, and whether details of cost increases and operating cash flow are disclosed.