Revenue and profit increased in the first quarter, but profit growth lagged revenue growth

First-quarter operating revenue was ¥12,591 million, an increase of ¥392 million from ¥12,199 million in the same period of the previous year. Operating profit, meanwhile, increased by only ¥17 million, from ¥785 million to ¥802 million, while ordinary profit rose from ¥778 million to ¥796 million and profit attributable to owners of the parent increased from ¥512 million to ¥521 million. Operating profit increased 2.2% and net income increased 1.8%, compared with revenue growth of 3.2%, meaning that the entire increase in revenue did not flow through to profit.

The operating margin declined by approximately 0.07 percentage points, from approximately 6.44% in the same period of the previous year to approximately 6.37% in the current quarter. For the full fiscal year ended March 2026, operating revenue was ¥49,947 million and operating profit was ¥3,108 million, producing an operating margin of approximately 6.22%, down from approximately 6.66% in the previous fiscal year. Although profit returned to year-on-year growth in the first quarter, it is difficult to conclude that the decline in margins caused by previous cost increases has been fully recovered.

In its previous full-year results, the company explained that its inability to fully pass on increases in personnel expenses and outsourcing costs was a factor behind the decline in operating profit. The first quarter also showed increases in personnel expenses, outsourcing costs and depreciation, among other items, but the increases by expense category, the amounts recovered through price revisions and the amounts absorbed by higher volumes were not disclosed. As a result, it is not possible at this point to distinguish whether the latest profit growth reflects sustainable price pass-through or a temporary revenue increase driven by higher volumes and contributions from newly established centers.

The full-year operating profit forecast is ¥3,200 million, making ¥1,600 million a benchmark if the first half is simply assumed to account for 50% of the full year. However, quarterly seasonality cannot be confirmed from the information provided, so ¥1,600 million should not be treated as a mechanical achievement threshold. In the first-half results, it will be important to check not only the absolute level of operating profit, but also whether the operating margin can be maintained at the first-quarter level of 6.37% and whether the rates of increase in personnel expenses and outsourcing costs and progress in passing on costs are explained numerically.