A ¥50 million operating profit forecast for FY2027 requires a substantial improvement in the second half

Revenue in Q1 of FY2027 was ¥1,515 million, down 26.3% from ¥2,055 million in the same quarter of the previous year. The operating loss was ¥1,020 million, widening by ¥675 million from ¥345 million a year earlier, while the ordinary loss was ¥1,029 million and the net loss attributable to owners of the parent was ¥1,050 million. On a simple calculation, the operating margin was approximately negative 67.3%, a substantial deterioration from approximately negative 16.8% in the same quarter of the previous year.

For FY2027 as a whole, the company forecasts revenue of ¥5,100 million, operating profit of ¥50 million, ordinary profit of ¥70 million and net profit attributable to owners of the parent of ¥30 million. Q1 revenue represented 29.7% of the full-year forecast, above the simple one-quarter benchmark, but the operating result was already a ¥1,020 million loss against the full-year forecast of a profit. Reaching full-year operating profit of ¥50 million from the Q1 result will require a total ¥1,070 million improvement in operating income over the remaining 3 quarters. Accordingly, in FY2027-H1 it will be necessary to determine which businesses will generate that improvement, rather than simply confirm a reduction in losses.

Q1 segment results were a ¥114 million loss for the education-related business, an ¥11 million loss for the sports business, ¥77 million of profit for the real estate business, an ¥897 million loss for the fund-management business and ¥23 million of profit for other businesses. The fund-management business was the primary factor weighing on overall earnings, while lower revenue following the closure of education-related venues and losses in the sports business also contributed. Maintaining the full-year forecast will require both a reduction in fund-management losses and an improvement in the education-related business, rather than relying solely on temporary gains such as real estate sales.

The education-related business has seasonal revenue and profit concentration in the second half because of training courses and new-term enrollment, so the Q1 loss partly reflects seasonal factors. However, the company also recorded an operating loss of ¥1,526 million on revenue of ¥6,705 million in FY2026, and the loss in Q1 of FY2027 widened further year on year. In FY2027-H1, it will be necessary to determine how much the assumptions behind training-course enrollment, the number of individual tutoring students, the effects of venue relocations and closures, and the outlook for fund-management losses are incorporated into the decision to maintain the full-year forecast.