Revenue growth but lower operating profit; margin recovery is needed to achieve the FY2027 full-year forecast

Operating revenue in the first quarter of FY2027 was ¥74,919 million, up 3.1% from ¥72,697 million in the year-earlier period. However, operating profit fell by ¥909 million, from ¥9,621 million to ¥8,712 million, representing a 9.5% decline. Operating profit margin on operating revenue fell by approximately 1.6 percentage points, from approximately 13.2% in the year-earlier period to approximately 11.6% in the current period, indicating that revenue growth has not translated directly into profit.

The full-year forecast is operating revenue of ¥305,000 million, operating profit of ¥34,300 million, ordinary profit of ¥37,500 million and net income attributable to owners of the parent of ¥27,340 million. Compared with the previous year's results, operating revenue is expected to increase 3.5%, while operating profit is expected to decline 6.1%, ordinary profit 7.8% and net income 12.5%. First-quarter operating revenue and operating profit represented approximately 24.6% and 25.4%, respectively, of the full-year forecasts. Progress against the forecasts is therefore not significantly behind schedule, but although the operating margin is above the approximately 11.2% full-year forecast, it has clearly deteriorated from the previous year's first quarter.

The company cited depreciation on newly acquired assets and higher repair costs for existing facilities as factors behind the decline in operating profit. Depreciation in the first quarter was ¥3,713 million, compared with ¥13,839 million for FY2026. The company has not disclosed these costs by acquired asset or segment, nor the increase from the year-earlier period. It is therefore not yet possible to determine from operating profit alone whether the higher costs reflect a temporary concentration of repairs or a recurring depreciation burden associated with capital investment.

In the next interim period, FY2027-H1, we will assess not only the year-on-year changes in operating revenue and operating profit, but also whether the operating margin improves from 11.6% in the first quarter, how much depreciation accumulates during the interim period and whether the increase in repair costs has run its course. In particular, if interim operating profit falls below ¥19,292 million in the year-earlier period, reliance on the second half will increase in achieving the full-year forecast of ¥34,300 million.