Full-year plan broadly on track at the interim stage; assess the achievability of second-half profit in Q3

Interim revenue was ¥29,741 million, down ¥675 million, or 2.2%, from ¥30,416 million in the same period of the previous year. Operating profit fell ¥43 million, or 9.8%, from ¥433 million to ¥390 million. Ordinary profit was ¥475 million, down 9.6% year on year, while interim net profit was ¥291 million, down 10.3%. Progress against the full-year forecast was 52.2% for ordinary profit and 52.0% for net profit. Thus, not only revenue and operating profit but also the profit items were broadly close to a time-apportioned level at the interim stage.

A simple calculation of the gap to the full-year forecast indicates that the second half requires revenue of ¥29,559 million, operating profit of ¥330 million, ordinary profit of ¥435 million and net profit of ¥269 million. In the second half of the previous year, revenue was ¥28,561 million and operating profit was ¥280 million. The current full-year plan therefore assumes revenue ¥998 million, or 3.5%, higher than the previous second half and operating profit ¥50 million, or 17.9%, higher. With housing demand weak, achieving the plan will require not only a recovery in revenue but also an improvement in the second-half profit margin.

Using 75% of the full-year forecast as a mechanical benchmark for cumulative Q3, the reference levels are revenue of ¥44,475 million, operating profit of ¥540 million, ordinary profit of ¥682.5 million and net profit of ¥420 million. To reach these levels from the interim results, standalone Q3 would need to generate revenue of ¥14,734 million and operating profit of ¥150 million. Standalone Q3 of the previous year is calculated from the difference between cumulative Q3 and cumulative Q2 at revenue of ¥13,716 million and operating profit of ¥67 million. Assuming the same seasonal allocation, standalone Q3 this year would therefore require revenue growth of approximately 7.4% and operating profit growth of approximately 123.9%.

However, the company does not disclose quarterly seasonality or the quarterly allocation of its plan, so the 75% benchmark is a mechanical reference for comparison, not a forecast. If Q3 falls below ¥44,475 million in revenue or ¥540 million in operating profit, the revenue and operating profit required in Q4 would exceed ¥14,825 million and ¥180 million, respectively. In Q3, the focus will be not only on cumulative progress but also on the rationale for maintaining the full-year forecast, the assumed second-half profit margin and whether the earnings forecast is revised.