Recovery to ¥5,400 million in H1 operating profit is the first checkpoint

In Q1 of the fiscal year ending March 2027, revenue rose 6.2% year on year to ¥58,698 million, while operating profit fell 28.5% to ¥2,194 million. The operating margin was 3.7%, down approximately 1.9 percentage points from approximately 5.6% a year earlier. Ordinary profit was ¥2,025 million and net income attributable to owners of the parent was ¥1,523 million, down 37.7% and 23.8%, respectively, year on year. The fact that expanding revenue has not translated directly into higher profit is the starting point for assessing the H1 results.

Q1 progress against the full-year plan was 23.5% for revenue, compared with 15.9% for operating profit, 14.5% for ordinary profit and 18.3% for net income attributable to owners of the parent. Profit is progressing more slowly than revenue, so it is necessary to determine whether the burden of higher wages, logistics-center restructuring and stabilization costs for new operations was concentrated in the first half, rather than attributing the gap simply to seasonality. The supplementary materials do not explicitly state the company’s self-assessment of Q1 against plan.

The company’s H1 operating profit target is ¥5,400 million. After deducting Q1 operating profit of ¥2,194 million, standalone Q2 operating profit must reach at least ¥3,206 million. This is approximately 1.5 times Q1’s result, making it important to assess not only whether revenue increases in Q2 but also whether the operating margin improves from 3.7%. The ¥5,400 million H1 target represents 39.1% of the full-year operating profit plan of ¥13,800 million, so failure to meet the H1 target would increase the scale of the recovery required in H2.

Q1 earnings were negatively affected by wage increases, investment projects and higher expenses, stabilization costs for new operations, and center consolidations, which outweighed the profit contribution from rate revisions and productivity improvements. In FY2027-H1, it will be necessary to determine whether these costs have temporarily fallen away or are continuing as new projects are launched, using both the operating margin and the amounts attributed to each factor.

At the next earnings announcement, priority should be given to the actual H1 operating profit against the ¥5,400 million target, standalone Q2 operating profit, and progress against the full-year ¥13,800 million plan. It will also be important to determine whether the full-year forecast is maintained or revised because of higher costs, and which of the factors behind the Q1 decline remain, as these will determine the credibility of the expected H2 profit recovery.