The revised FY2027 full-year plan: first-half profit progress and second-half repeatability are the focus

FY2027-Q1 revenue was ¥1,566 million, down 3.9% year on year; operating profit was ¥254 million, up 34.7%; ordinary profit was ¥233 million, up 64.5%; and net income attributable to owners of the parent was ¥168 million, up 74.4%. Progress against the full-year forecasts as of July of ¥6,500 million in revenue, ¥850 million in operating profit, ¥730 million in ordinary profit and ¥500 million in net income was 24.1%, 29.9%, 31.9% and 33.6%, respectively, with profit progress ahead of revenue.

Following the forecast revision on 19 October, full-year revenue was raised to ¥6,700 million, operating profit to ¥1,100 million, ordinary profit to ¥1,000 million, net income to ¥700 million and earnings per share to ¥47.26. This represents a substantial revision of 29.4% for operating profit and 40.0% for net income from the previous forecasts. Applying FY2027-Q1 results to the revised forecasts gives progress of approximately 23.4% for revenue, 23.1% for operating profit and 24.0% for net income, meaning that the front-loaded profit progress evident against the original forecasts is relatively less pronounced under the revised forecasts.

The main reason for the upward revision was that earnings from the investment management business are expected to significantly exceed the previous assumptions. Reports indicate that the first-half operating profit forecast was raised from ¥420 million to ¥750 million. Meanwhile, earnings from each business excluding investment management are generally expected to fall below the previous forecasts. Achievement of full-year operating profit of ¥1,100 million therefore depends more on upside from investment management than on simultaneous growth in the four core segments of publishing, corporate services, software and networks, and education and human resources.

For FY2027-H1, we will assess actual operating profit against the first-half forecast of ¥750 million, recovery in operating profit excluding investment management, and changes in the assumptions for the second half underlying the full-year forecast. In particular, even if first-half operating profit reaches ¥750 million, ¥350 million will be required in the second half to achieve the revised full-year forecast of ¥1,100 million. Whether the second-half profit assumptions can be explained by recovery in orders and sales and cost reductions in the core businesses, rather than continued investment gains, will be a basis for judging the sustainability of the upward revision.