Q1 margin pressure is the core issue for H1, with operating profit down despite higher revenue

Consolidated revenue in FY2027 Q1 was ¥5,222 million, up 5.1% from ¥4,969 million a year earlier. Operating profit, however, fell 29.4% to ¥92 million from ¥130 million, indicating that revenue growth did not flow through to profit. Operating margin, calculated from the disclosed figures, fell approximately 0.9 percentage points from about 2.6% a year earlier to about 1.8%. At the next interim results, it will be necessary to determine whether this decline was temporary or reflected a change in the cost structure.

Ordinary profit also fell 46.0% year on year to ¥61 million. The quarterly net loss attributable to owners of the parent was ¥12 million, although the loss narrowed from ¥44 million a year earlier. The first quarter included a ¥8 million gain on the sale of fixed assets and ¥19 million in compensation expenses, but the scale of extraordinary income and expenses was not large enough to fully explain the decline in operating profit. In H1, it will be important to distinguish between a continued decline in operating-level margins and a return to profitability in final earnings, including extraordinary items and the tax burden.

By segment, the core passenger transportation business reported revenue of ¥3,887 million, up 5.6% year on year, and operating profit of ¥85 million, up 20.4%. The real estate business reported revenue of ¥290 million, up 12.5%, and operating profit of ¥161 million, up 0.5%. The sales business, however, reported revenue of ¥505 million, up 1.8%, but operating profit of ¥36 million, down 45.1%. The services and maintenance business reported revenue of ¥538 million, up 1.4%, and operating profit of ¥22 million, up 62.3%. Reported segment profit varied widely, and improving consolidated operating profit will require not only passenger transportation but also a recovery in the profitability of the sales business.

The company explained that higher vehicle utilization resulting from an increase in drivers and taxi fare revisions boosted revenue, while soaring fuel costs and other factors reduced operating profit. However, it has not disclosed the monetary effects of higher fares, the volume effect of increased utilization, or the cost impact of higher fuel prices. In FY2027 H1, it will be necessary to confirm not only whether consolidated operating profit exceeds the year-earlier level, but also whether the passenger transportation business can expand its ¥85 million profit, whether the sales business can avoid a further decline from ¥36 million, and whether operating margin can return to at least the 2% range.