Revenue rose in Q1, but operating profit is behind schedule; H1 recovery is the focus

Revenue in Q1 of the fiscal year ending March 2027 was ¥81,386 million, up 1.1% year on year. Operating profit was ¥3,792 million, ordinary profit was ¥6,641 million, and profit attributable to owners of the parent was ¥5,260 million, down 48.0%, 32.4%, and 21.4% year on year, respectively. Operating profit fell sharply despite revenue growth, indicating clear margin pressure in the quarter.

The full-year forecasts are revenue of ¥350,000 million, operating profit of ¥20,000 million, ordinary profit of ¥28,000 million, and net profit of ¥25,000 million. Revenue is expected to increase 3.1% from the prior fiscal year, while operating profit is expected to decline 23.6%. As of Q1, revenue was approximately 23.3% of the full-year forecast and operating profit approximately 19.0%, meaning revenue is progressing faster than operating profit. If H1 is simply assumed to represent half of the full year, revenue of ¥175,000 million and operating profit of ¥10,000 million would provide mechanical reference points. However, the company has not presented these levels as planning benchmarks, so seasonality must be taken into account.

The deterioration in profitability is also significant. Operating margin, calculated from prior-year Q1 revenue of ¥80,478 million and operating profit of ¥7,296 million, was approximately 9.1%, compared with approximately 4.7% in Q1 this year, a decline of approximately 4.4 percentage points. The combined total of cost of sales, selling expenses, and general and administrative expenses increased 6.0% year on year. In the next earnings release, it will be important to assess how much of the decline in the Media and Content business and the fixed and start-up costs associated with the opening of Tokyo Dream Park will remain.

There was no revision to the full-year earnings forecast in the Q1 results, and the annual dividend forecast was maintained at ¥100. Accordingly, the key issues for FY2027-H1 will be whether cumulative operating profit progress improves, whether the company remains confident in its ¥20,000 million full-year operating profit forecast, and whether the year-on-year decline in time and spot advertising revenue narrows in Q2.