Can operating profit growth despite lower revenue be repeated in the first half?

First-quarter revenue was ¥6,547 million, down ¥257 million from ¥6,804 million in the same period of the previous year. Operating profit, however, rose ¥64 million from ¥235 million to ¥299 million, while net income also increased from ¥192 million to ¥222 million. A simple calculation of the operating margin shows an improvement of approximately 1.11 percentage points, from approximately 3.45% in the same period of the previous year to approximately 4.57%. Profit was therefore driven by improved profitability rather than revenue growth.

The company attributed the revenue decline to instability in the size and timing of individual orders, the postponement of promotional projects by some customers in the direct-mail business, and smaller projects and the reversal of one-off projects from the previous year in the sales promotion and events businesses. The factors behind the profit increase included higher-value services, mechanization and labor-saving measures at logistics sites, and price negotiations. The company has not disclosed the profit contribution of each factor or the breakdown of unit prices and volumes.

In the first-half results, it will be necessary to determine whether the margin improvement was caused by a temporary project mix or by sustained productivity and pricing improvements. If the first-quarter operating margin of approximately 4.57% can be maintained, profit may remain firm even if revenue is roughly flat year on year. However, the degree to which price increases have taken hold, the labor cost savings from mechanization, and the timing of the recovery in promotional projects have not been disclosed quantitatively.

The comparable first half of the fiscal year ended March 2026 generated revenue of ¥13,858 million, operating profit of ¥529 million and net income of ¥396 million. In the next results announcement, we will compare cumulative first-half revenue and operating profit for the fiscal year ending March 2027 with these levels and check whether the revenue decline has narrowed and whether the operating margin has remained around 4.5%. Whether the company presents the factors behind the change in operating profit on a monetary basis will also be important in assessing whether the latest profit growth can be repeated.