Profit fell well below revenue as the Expo windfall faded, making the recovery in the first half the focus

Revenue in the first quarter of the fiscal year ending March 2027 was ¥12,989 million, down 1.3% from ¥13,160 million in the year-ago quarter. Operating profit, meanwhile, was ¥287 million, down ¥380 million, or 57.0%, from ¥667 million. The operating margin declined 2.9 percentage points from approximately 5.1% in the year-ago quarter to approximately 2.2%, indicating that the deterioration in profitability was greater than the decline in demand. Ordinary profit was ¥314 million, while quarterly net profit attributable to owners of the parent was ¥109 million, down 55.8% and 77.8%, respectively, year on year.

The company attributed the decline in profit not only to the fading of the Expo-related windfall generated by the Osaka-Kansai Expo in the year-ago quarter, but also to various safety-related investments and higher personnel costs. However, the first-quarter disclosure did not break out the amounts by which the fading Expo windfall affected revenue and operating profit, the amount spent on safety investment, the increase in personnel costs, or the change in fuel costs. Information is insufficient to assess the ¥380 million year-on-year decline in operating profit by demand-related and cost-related factors. It will therefore be important to see whether the first-half results provide only the same qualitative explanation or add amounts by factor.

For the fiscal year ended March 2026, revenue was ¥55,580 million, operating profit was ¥4,199 million and the operating margin was 7.6%, reflecting higher revenue and profit driven by Expo-related transportation and route expansion. In contrast, the full-year operating profit forecast for the fiscal year ending March 2027 is ¥3,300 million, a planned decline of 21.4% from the previous fiscal year. The first-quarter decline in profit can therefore be viewed as falling within the assumptions underlying the company’s plan, although the timing of a return to the previous year’s profitability level has not yet been indicated.

In the next first-half results, it will be necessary to compare operating profit with the ¥1,259 million recorded in the year-ago period and check cumulative progress in revenue, operating profit and net profit. Key points will include how much operating profit accumulates from the first-quarter ¥287 million by the end of the first half, whether route demand and inbound demand can offset higher costs in place of the Expo windfall, and whether the increases in safety investment and personnel costs are temporary or ongoing.