Q1 operating profit was ahead of plan, but H1 will be the stage for confirming the full-year forecast's repeatability

Operating revenue for the first quarter of the fiscal year ending March 2027 was ¥125.819 billion, operating profit was ¥20.846 billion, ordinary profit was ¥20.945 billion, and net income attributable to owners of the parent was ¥15.7 billion. Year on year, operating revenue increased 7.1%, operating profit increased 4.4%, and ordinary profit increased 2.5%, while net income declined 4.2%, indicating that the improvement in the top line and at the operating level has not flowed through fully to bottom-line earnings.

The full-year forecasts are ¥520.5 billion for operating revenue, ¥75.0 billion for operating profit, ¥70.9 billion for ordinary profit, and ¥51.6 billion for net income. Calculated simply from Q1 results, progress rates are 24.2% for operating revenue, 27.8% for operating profit, 29.5% for ordinary profit, and 30.4% for net income. Compared with the 25% of the year elapsed in the quarter, operating revenue is broadly in line with plan while operating profit is ahead, making it important to see whether this lead is maintained in H1.

The Q1 operating margin was 16.6%, down 0.4 points from approximately 17.0% in the same period a year earlier. Operating profit growth of 4.4% lagged revenue growth of 7.1%, indicating that the increase in revenue did not translate fully into profit. In H1, it will be necessary to assess whether revenue growth in transportation and real estate, among other areas, can absorb increases in personnel expenses, repair costs, and other expenses, and whether the operating margin declines further into the low 16% range.

The full-year earnings forecast was unchanged as of Q1, with the ¥75.0 billion operating profit plan maintained. However, the company did not prepare a quarterly consolidated cash flow statement for Q1, so results for cash flow from operating activities and investment spending cannot be confirmed. In H1, it will be necessary to assess not only operating profit progress but also whether the earnings plan is translating into cash generation, including cash flow from operating activities, cash flow from investing activities, and the cash balance.