Margin improvement in the first half faded in the 9-month cumulative period

In FY2026 first-half, revenue was ¥1,666.403 million, down 1.8% year on year, while operating profit was ¥148.902 million and ordinary profit was ¥159.251 million, up 8.1% and 9.0%, respectively. A simple calculation puts the operating margin at approximately 8.9%, an improvement of about 0.8 percentage points from approximately 8.1% in the year-earlier period. Pricing, marketing, sales of previously published titles and measures to reduce returns may have contributed to protecting profit despite lower revenue.

In the 9-month cumulative period, revenue was ¥2,394.669 million, operating profit was ¥151.172 million and ordinary profit was ¥171.900 million, representing year-on-year declines of 2.1%, 3.0% and 1.6%, respectively. Simply subtracting the first-half cumulative figures gives revenue of ¥728.266 million and operating profit of ¥2.270 million for July to September, implying an operating margin of approximately 0.3% for the period. Although simple comparisons are limited by seasonality and the timing of expense recognition, it is important that the margin improvement through the first half was not sustained in the 9-month cumulative period.

The full-year forecasts are revenue of ¥3,096.000 million, operating profit of ¥100.000 million and profit attributable to owners of the parent of ¥126.000 million. At the 9-month point, operating profit had already reached 151.2% of the full-year forecast and net profit approximately 165.9%, based on a simple calculation, but the full-year forecasts had not been changed as of the third quarter. There is upside potential, but with 9-month cumulative operating profit below the year-earlier level, it will be important to determine whether the company views this as a temporary shortfall or as a conservative forecast that incorporates higher expenses in the second half.

At the next full-year results announcement, the key points will be whether the company can explain not only an upward revision to operating profit or the final results, but also fourth-quarter standalone revenue and operating profit, the contributions from the publishing business and publishing-related business, and the reversal of copyright royalty-related income recorded in the year-earlier period. In particular, if the company maintains its forecast after exceeding full-year operating profit of ¥100.000 million, it will need to provide a quantitative explanation of the earnings level it expects for the next fiscal year.