Operating profit led in the first quarter; the key question is whether full-year plan visibility can be confirmed in the first half

First-quarter revenue for the fiscal year ending February 2027 was ¥21,496 million, operating profit was ¥1,899 million and ordinary profit was ¥1,900 million. Revenue and operating profit both rose 6.4% year on year, while ordinary profit increased 6.0%, indicating growth through the ordinary profit stage, which includes the core business and non-operating items. In contrast, quarterly net profit attributable to owners of the parent was ¥844 million, down 30.3% year on year. Revenue reached 27.6% of the full-year forecast of ¥78,000 million, while operating profit reached 54.3% of the ¥3,500 million forecast, with profit progress substantially ahead of revenue.

Compared with the full-year plan, revenue for the fiscal year ending February 2026 was ¥78,745 million, against a forecast of ¥78,000 million for the fiscal year ending February 2027. Operating profit was ¥4,499 million versus a forecast of ¥3,500 million. The company is projecting a 0.9% year-on-year decline in revenue and a 22.2% decline in operating profit, with the operating margin expected to fall from 5.7% in the previous fiscal year to approximately 4.5% on a simple calculation. By contrast, the first-quarter operating margin was approximately 8.8%, calculated by dividing ¥1,899 million by ¥21,496 million. The key issue is the assumption underlying the margin decline from the second quarter onward.

In the first half of the previous fiscal year, which ended February 2026, revenue was ¥38,741 million and operating profit was ¥2,533 million. At the next first-half results announcement, the initial checks will be whether revenue exceeds ¥39,000 million, equivalent to half the full-year forecast, and whether operating profit reaches ¥1,750 million. Operating profit had already reached ¥1,899 million in the first quarter alone, so operating profit would have to decline substantially or turn negative in the second quarter alone for first-half operating profit to fall below ¥1,750 million. Accordingly, the focus will be not only on progress rates but also on the second-quarter operating margin and the disclosed factors behind changes.

The company made no revisions to its earnings forecast in the first quarter, leaving its full-year outlook for revenue and operating profit unchanged. However, the first-quarter summary financial statements did not disclose the operating margin, so external observers cannot fully distinguish whether the margin improvement resulted from the contract mix or the timing of projects. At the next results announcement, first-half cumulative revenue, operating profit, operating margin and progress rates against the full-year forecasts should be reviewed together to assess the likelihood of achieving full-year operating profit of ¥3,500 million and whether the plan has been revised.