First-quarter profit is behind the full-year forecast trajectory

In the first quarter of the fiscal year ending March 2027, revenue was ¥72,668 million, down 1.1% year on year, while operating profit was ¥929 million, down 53.3%. Ordinary profit was ¥1,329 million, down 42.4%, and net profit attributable to owners of the parent was ¥1,313 million, down 32.4%. Calculated against the full-year forecasts, revenue was ¥72,668 million ÷ ¥307,000 million, or 23.7%, while operating profit was ¥929 million ÷ ¥6,200 million, or only 15.0%, leaving profit progress 8.7 percentage points below revenue progress.

First-quarter revenue was close to the simple 25% quarterly benchmark, and the results were assessed as broadly in line with the full-year plan. Operating profit, however, was 10.0 percentage points below the 25% benchmark. Since the information provided does not include the company’s half-year or quarterly plans adjusted for seasonality, ¥153,500 million of revenue and ¥3,100 million of operating profit are not company forecasts but reference benchmarks calculated mechanically as 50% of the full-year forecasts.

The company did not revise its full-year earnings forecasts when announcing its first-quarter results. The FY2027 full-year forecasts are revenue of ¥307,000 million, operating profit of ¥6,200 million, ordinary profit of ¥7,000 million and net profit of ¥6,000 million. Revenue is expected to increase 3.3% year on year and operating profit 2.1%, while ordinary profit is expected to decline 7.4% and net profit 38.0%. The company explained that the reversal of the prior-year demand boost from the Osaka-Kansai Expo and conditions in the Middle East weighed on first-quarter revenue, while increased investment in personnel and higher systems expenses pressured operating profit.

In FY2027-H1, the key issue will be not only whether the simple 50% benchmarks are achieved, but also whether operating profit progress moves closer to revenue progress. If operating profit is below ¥3,100 million, the recovery required to reach ¥6,200 million from the third quarter onward will be greater. Conversely, if revenue of around ¥153,500 million and operating profit of at least ¥3,100 million are secured and the company maintains its full-year forecasts, this would support the view that the first-quarter profit decline was temporary.