Revenue and profit increased in Q1, but operating profit growth lagged revenue growth

In FY2027-Q1, operating revenue was ¥339,048 million, operating profit was ¥49,505 million, ordinary profit was ¥52,303 million and net profit attributable to owners of the parent was ¥36,800 million. Year on year, operating revenue increased 9.5%, operating profit 2.9%, ordinary profit 7.1% and net profit 7.6%, with all major profit measures recording increases. However, against an increase of ¥29,289 million in the top line, the increase in operating profit was limited to ¥1,401 million.

The operating margin declined by approximately 0.9 percentage points, from approximately 15.5% in the same period of the prior year to approximately 14.6% in the quarter. Progress against the full-year forecast was 26.8% for operating revenue, 40.7% for operating profit, 45.9% for ordinary profit and 46.6% for net profit, meaning that profit progress was well ahead of revenue progress. This may reflect Q1 seasonality and the timing of real estate sales recognition, so it will be necessary to determine whether the same pattern continues in H1 or whether higher costs or the disappearance of special demand become apparent in Q2.

By segment, Q1 operating profit was ¥10,503 million in Urban Transportation, ¥28,077 million in Real Estate, ¥9,127 million in Entertainment, ¥155 million in Information and Communications, ¥2,701 million in Travel, ¥726 million in International Transportation and ¥535 million in Other. Real Estate and Entertainment lifted profit, while Urban Transportation, Information and Communications, and Travel continued to face weakness from higher costs and demand factors. Consolidated operating profit of ¥49,505 million does not match the sum of segment profit because of adjustment items, but the concentration of profit sources in real estate should be monitored.

The company has not changed its full-year forecast of operating revenue of ¥1,265,000 million, operating profit of ¥121,700 million, ordinary profit of ¥114,000 million and net profit of ¥79,000 million. In FY2027-H1, it will be important to determine whether the high Q1 profit progress reflects only the timing of recognizing property sales or represents repeatable earnings power capable of absorbing weakness in Urban Transportation, Travel, and Information and Communications. In particular, whether cumulative operating profit exceeds approximately ¥60,850 million and whether the operating margin declines further from around 14.6% will be practical benchmarks for assessing the likelihood of achieving the full-year forecast.