FY2027 Q1: Lower revenue and profit, full-year forecast unchanged, with the first half as the key inflection point

Operating revenue for the first quarter of the fiscal year ending March 2027 was ¥3,529 million, down ¥237 million, or 6.3%, from ¥3,766 million in the same period of the previous year. Operating profit was ¥634 million, down ¥133 million, or 17.4%, from ¥767 million. Ordinary profit was ¥644 million, and net profit attributable to owners of the parent was ¥396 million, with all major profit items below the previous year's levels. The operating margin also fell by approximately 2.4 percentage points, from approximately 20.4% in the same period of the previous year to approximately 18.0%.

The full-year forecasts remain unchanged at operating revenue of ¥14,950 million, operating profit of ¥2,040 million, ordinary profit of ¥2,020 million and net profit attributable to owners of the parent of ¥1,840 million. First-quarter operating revenue and operating profit represent 23.6% and 31.1%, respectively, of the full-year forecasts. Profit progress is therefore at a certain level, but profit declined year on year. Meeting the full-year forecasts will require the company to absorb the reactionary decline in the real estate business toward the second half and sustain profit growth in the transportation and leisure and services businesses.

The company explained that the main reason for the revenue decline was the significant reactionary impact of revenue from the sale of real estate for sale recorded in the same period of the previous year. At Hotel Keifuku Fukui Ekimae, the fading impact of the Shinkansen opening also reduced revenue. Meanwhile, transportation was supported by tourism demand for railways and trams and increased use of Keifuku buses, while the leisure and services business benefited from higher customer and visitor numbers in the merchandise business and at Echizen Matsushima Aquarium. In other words, the decline in company-wide profit reflected not only broad-based weakening in demand, but also the reaction to temporary revenue factors in the previous year and divergent performance across businesses.

At the next second-quarter results announcement, the first point to confirm will be whether operating revenue exceeds the comparative first-half figure of ¥7,651 million and operating profit exceeds ¥1,528 million. In addition, even if the full-year forecasts remain unchanged, it will be important to determine whether the reactionary decline in real estate sales revenue will run its course after the second quarter, whether the fading Shinkansen-opening effect at the hotel will continue, and whether the assumptions for the second half toward operating profit of ¥2,040 million will become more concrete.