Can the plan to grow profit despite lower revenue in FY2027 be achieved?

FY2026 revenue was ¥4,375 million, up 11.5% year on year, operating profit was ¥398 million, up 13.4%, ordinary profit was ¥394 million, up 15.5%, and net income was ¥251 million, up 45.5%. The company shifted from the previous year’s revenue of ¥3,925 million and operating profit of ¥351 million to higher revenue and profit. Contributions from the TGC production business and large branding projects provided the foundation for the recovery.

By contrast, the company’s FY2027 forecasts are revenue of ¥4,009 million, operating profit of ¥410 million, ordinary profit of ¥407 million and net income of ¥268 million. Revenue is expected to decline 8.4% year on year, while operating profit is expected to rise 3.0%, implying an improvement in the operating margin from 9.1% in FY2026 to approximately 10.2%, or about 1.1 percentage points. The plan calls for profit to be maintained or increased even as revenue declines, making sponsorship pricing, project profitability, price pass-through and fixed-cost absorption the key issues rather than simply increasing the number of events held.

The company says it will gradually optimize pricing in line with higher added value, while the increase in the cost ratio caused by rising labor and other prices continues. However, statutory disclosures classify the business as a single branding platform segment, and do not disclose operating profit or project profitability for the TGC production, content production and branding, and digital advertising businesses. As a result, the next earnings release will need to clarify whether the FY2027 margin improvement will come from high-margin projects or cost controls.

FY2027-Q1 revenue of ¥905 million and operating profit of ¥62 million in FY2026-Q1 will provide the first comparison point. Q1 is particularly sensitive to the timing of TGC events, and even if results exceed the year-earlier period, the contribution to the full-year plan will not be established immediately. However, if revenue falls below ¥905 million, the decline assumed in the plan may be progressing more rapidly than expected. Conversely, if revenue is maintained, operating profit exceeds ¥62 million and the operating margin improves year on year, this would provide an initial test of the FY2027 scenario of lower revenue and higher profit.