Revenue up, but the core business remains loss-making: the rising cost ratio is the key point to monitor in FY2027 H1

In Q1 of FY2027, from 1 April to 30 June 2026, consolidated revenue was ¥3,189.255 million, up 2.3% year on year. However, operating loss widened from ¥21.451 million in the year-earlier quarter to ¥77.212 million, an expansion of ¥55.761 million. A simple calculation of the operating margin shows a decline of approximately 1.7 percentage points, from approximately negative 0.7% in the year-earlier quarter to approximately negative 2.4% in the current quarter, indicating that higher revenue has not translated into improved profitability.

By segment, revenue from the commercial kitchen-related business, which accounts for most of total revenue, rose 2.5% year on year to ¥3,105.677 million, while segment profit fell 40.7% to ¥127.005 million. The segment's profit margin was approximately 4.1%. Revenue from the real estate leasing business fell 1.8% to ¥83.578 million, but profit rose 0.1% to ¥49.393 million, producing a margin of approximately 59.1%. The relatively high-margin real estate leasing business is offsetting the deterioration in the core business's profitability, but its smaller scale has not been sufficient to eliminate the consolidated operating loss.

The company cited the higher cost ratio as a factor behind the decline in profit from the commercial kitchen-related business, and also referred to increases in raw material prices, personnel expenses and energy prices. However, this disclosure does not break down how many percentage points the cost ratio rose from the year-earlier quarter or by how many millions of yen each of raw materials, personnel expenses and energy costs reduced operating profit. The breakdown of corporate expenses and other items that account for the difference between total segment profit and consolidated operating income (loss) has also not been disclosed in a verifiable form.

In the next H1 results, it will be important to see whether the profit margin of the commercial kitchen-related business improved from approximately 4.1% in Q1 and whether the change in the cost ratio can be presented in percentage points. In addition to whether consolidated operating income (loss) reaches ¥0 million or more on a cumulative H1 basis, we will check whether the real estate leasing business can maintain profit of around ¥49.393 million and whether it is large enough to offset the decline in the core business.