Full-year guidance held despite first-half declines in revenue and profit, with recovery in the second half the key focus

FY2026-H1 revenue was ¥35.161 billion, down 4.5% year on year, while operating profit was ¥1.950 billion, down 27.2%. Ordinary profit was ¥2.245 billion and interim net profit attributable to owners of the parent was ¥1.658 billion, down 26.9% and 36.2%, respectively, from the same period of the previous year. The operating margin, calculated on a simple basis, was 5.5%, approximately 1.7 percentage points below the 7.3% calculated from FY2025-H1 revenue of ¥36.806 billion and operating profit of ¥2.680 billion.

The company has nevertheless left full-year guidance unchanged at revenue of ¥75.0 billion, operating profit of ¥4.2 billion, ordinary profit of ¥4.8 billion and net profit attributable to owners of the parent of ¥3.9 billion. First-half progress was 46.9% for revenue and 46.4% for operating profit, approximately 3.1 and 3.6 percentage points below the 50% mark on a calendar-year basis, respectively. To meet full-year guidance mechanically, the company would need second-half revenue of ¥39.839 billion and operating profit of ¥2.250 billion, requiring operating profit to exceed the first-half result by approximately 15%.

FY2025 full-year operating profit was ¥4.108 billion, so FY2026 guidance of ¥4.2 billion represents only a 2.2% year-on-year increase. Comparing the second halves alone, however, the company will need a result substantially above FY2025 second-half operating profit. In Q3, it will be necessary to assess not only whether full-year guidance has been maintained, but also how much revenue and profit large projects in the Environment & Energy business converted in the second half, and whether the International business reduced its losses.

A summary of the earnings briefing video states that the order backlog at the end of the first half was ¥47.7 billion, indicating that a revenue base for the second half has been secured. However, the evaluated earnings summary does not disclose an official backlog figure. In Q3, disclosure of the backlog breakdown by segment, the scheduled timing of revenue recognition and project profitability will be important. The key question is whether the first-half decline in profit was a temporary timing issue or included a deterioration in the profitability structure.