Revenue is rising, but margins are narrowing; Q3 focus shifts to whether earnings pressure eases

Operating revenue in the six months ended June 2026 was ¥17,502 million, up 10.6% from ¥15,820 million in the same period of the previous year. Operating profit, however, fell 15.6% to ¥986 million from ¥1,169 million, and the operating margin declined 1.8 percentage points from approximately 7.4% to approximately 5.6%. Revenue growth has not translated directly into profit growth, making the key issue at the next earnings announcement whether the ability to convert higher revenue into profit is recovering, rather than simply whether revenue is increasing.

The full-year forecasts remain unchanged at operating revenue of ¥36,870 million and operating profit of ¥2,400 million. First-half progress was 47.4% for operating revenue and 41.1% for operating profit, meaning revenue is progressing ahead of profit. Without accounting for seasonality, the simple three-quarter benchmarks are ¥27,653 million for cumulative Q3 operating revenue and ¥1,800 million for operating profit. If results fall below these levels, it will be necessary to assess not only the scope for recovery from the year-end peak season in the second half, but also how much of the cost increases and start-up expenses for new sites remain embedded in the full-year forecasts.

First-half operating revenue comprised ¥17,105 million from the logistics business, up 10.9% year on year, and ¥396 million from Other businesses, down 2.9%. The reporting structure is effectively treated as a single segment, and operating profit and margins by segment have not been disclosed. Based on the current disclosure, it is therefore not possible to determine whether the logistics business's revenue growth reflects expansion in higher-margin services or low-margin scale expansion driven by higher volumes or unit prices.

At the next earnings announcement, we would like to assess, where possible by factor, the operating cost ratio, operating margin, margin at the Tokai SCM Center, and the increases attributable to driver shortages, labor costs and fuel costs. Even a recovery in the operating margin from 5.6% to the 6% range would signal that profit progress is moving closer to revenue progress. Conversely, if operating revenue exceeds the simple progress benchmark but operating profit remains below ¥1,800 million, the pattern in which site expansion pressures margins may still be continuing.