Can the company absorb the Expo-related effects and maintain full-year operating profit of ¥1,600 million?

For the first quarter of the fiscal year ending March 2027, consolidated revenue was ¥8,316 million, operating profit was ¥439 million, ordinary profit was ¥505 million, and profit attributable to owners of the parent was ¥322 million. Year on year, revenue fell 6.1%, operating profit fell 21.3%, ordinary profit fell 13.9%, and net profit fell 22.3%, with profit declining more sharply than revenue. The company has nevertheless left its full-year forecasts unchanged at revenue of ¥37,000 million, operating profit of ¥1,600 million, ordinary profit of ¥1,600 million, and net profit of ¥1,100 million.

First-quarter progress toward the full-year forecasts was 22.5% for revenue, 27.5% for operating profit, 31.6% for ordinary profit, and 29.3% for profit attributable to owners of the parent. Simply deducting first-quarter results from the full-year forecasts leaves required revenue of ¥28,684 million, operating profit of ¥1,161 million, ordinary profit of ¥1,095 million, and net profit of ¥778 million for the remainder of the year. The company has not disclosed its first-half forecast, the required level for the remainder of the year, or the effects of seasonality, so the first-quarter progress rates alone do not provide enough information to assess the likelihood of achieving the full-year forecasts.

The company attributed the declines in revenue and profit mainly to the reversal of the special business generated by the Osaka-Kansai Expo in the year-earlier quarter. It also cited higher personnel costs, difficulties securing staff, unstable procurement of equipment and materials, and a higher raw-material cost burden. The company referred to rising orders for large-scale redevelopment projects and maintenance work at commercial and logistics facilities, but did not provide a bridge showing the revenue and profit contribution from Expo-related business, the value of the increase in orders, or the impact of higher costs.

In FY2027-H1, the first point to check will be whether cumulative second-quarter revenue and operating profit have improved relative to first-quarter progress. Operating profit is particularly important: the full-year forecast is ¥1,600 million, down 22.0% year on year, implying that the company plans to generate a further ¥1,161 million after first-quarter operating profit of ¥439 million. Whether the full-year forecast is maintained at the first-half results or revised because of the Expo-related reversal and higher costs will provide the first clear indication of the company’s outlook.