The ability to absorb costs despite higher revenue is the focus for FY2027-H1 as operating profit declines

FY2027-Q1 revenue was ¥12,767 million, up 3.8% year on year, while operating profit was ¥322 million, down 7.4%. Ordinary profit was ¥410 million, down 2.8%, and net income attributable to owners of the parent was ¥276 million, down 2.9%. It is necessary to determine whether the pattern of higher revenue failing to translate into higher earnings will continue in FY2027-H1.

Gross profit increased ¥62 million year on year, while SG&A expenses increased ¥88 million. The company cited higher wage-increase rates, ¥19 million in depreciation on the new Yamagata branch office building, and an increase of ¥15 million in repairs, fees and other expenses. In the next earnings release, it will be important to see whether personnel costs resulting from wage increases, logistics costs, depreciation, and repairs and fees can be disclosed, where possible, as first-half cumulative amounts or year-on-year changes.

In FY2026, revenue also increased 3.4% year on year to ¥50,813 million, but operating profit declined 5.8% to ¥1,571 million. The financial details show that gross profit increased to ¥11,218 million from ¥10,969 million, while the operating margin declined from 3.4% to 3.1%. The fact that higher fixed and personnel costs are weighing on earnings despite continued revenue growth is not merely a one-off quarterly issue, but an ongoing matter affecting first-half profitability.

The FY2027 full-year forecasts are revenue of ¥52,500 million and operating profit of ¥1,520 million. Operating profit progress at the end of Q1 was approximately 21.2%, leaving it ¥438 million below the simple half-year benchmark of ¥760 million. Seasonality must be taken into account, but FY2027-H1 should be assessed based on cumulative operating profit, the operating margin, when the increase in expenses peaks, and whether the ¥1,520 million full-year forecast is maintained.