Q1 earnings are behind revenue against the full-year plan, making the interim period the key opportunity for recovery

In Q1 of the fiscal year ending March 2027, covering April to June 2026, operating revenue rose 6.2% year on year to ¥7,005 million. Operating profit fell 8.7% to ¥260 million, ordinary profit fell 38.5% to ¥187 million, and quarterly net income attributable to owners of the parent fell 60.0% to ¥71 million. Although the top line is growing, profit is declining at each stage, so progress is not simply a combination of higher revenue and higher profit.

The full-year forecasts are ¥30,000 million in operating revenue, ¥1,200 million in operating profit, ¥1,140 million in ordinary profit and ¥650 million in net income, and had not been revised as of Q1. Progress against the full-year forecast was approximately 23.4% for operating revenue and approximately 21.7% for operating profit, leaving operating profit approximately 1.7 percentage points behind operating revenue. The gap is not significant for progress toward the full-year forecast at the Q1 stage, but margins need to improve.

Using a simple 50% interim-period benchmark without adjusting for seasonality, operating revenue would be expected to reach ¥15,000 million and operating profit ¥600 million. Based on Q1 results, the additional amounts needed by the interim period are ¥7,995 million in operating revenue and ¥340 million in operating profit. In the interim period of the fiscal year ended March 2026, operating revenue was ¥13,147 million and operating profit was ¥590 million. At the next results announcement, it will therefore be necessary to assess not only year-on-year comparisons but also the buildup in operating profit against the midpoint of the full-year forecast.

The company did not disclose the operating margin for Q1, but it was approximately 3.7% based on operating revenue and operating profit. This was below the 4.2% operating margin for the full fiscal year ended March 2026, making it important to see whether the gap narrows by the interim period. Increases in personnel expenses, real estate acquisition taxes and amortization of goodwill at acquired subsidiaries have been explained qualitatively, but amounts by factor have not been disclosed. At the next results announcement, the extent of operating-margin improvement and the amounts of cost increases should therefore be reviewed together.