Q1 saw revenue growth but lower profit, with FY2027-H1 the key period for confirming an operating profit recovery

FY2027-Q1 revenue was ¥52,185 million, up 2.7% from ¥50,826 million in the same period of the previous year. Operating profit, however, declined 21.8% to ¥1,244 million from ¥1,591 million. The operating margin was approximately 2.4%, down about 0.7 percentage points from approximately 3.1% a year earlier. Revenue growth has not translated directly into operating profit, so in the next interim results it will be necessary to focus less on revenue growth and more on gross profit, advertising expenses and the absorption of fixed costs.

At the profit level, ordinary profit was ¥1,369 million, up 8.8% year on year, while quarterly net profit attributable to owners of the parent was ¥939 million, up 27.2%. Special gains and losses, including a ¥84 million gain on the sale of investment securities, a ¥10 million loss on the disposal of fixed assets and a ¥4 million impairment loss, were not large enough to fully explain the decline in operating profit. At the same time, the company stated that higher dividend income and lower payment fees boosted ordinary profit, creating a structure in which non-operating income and expenses offset the deterioration in operating profit. Whether a detailed breakdown of non-operating income and expenses will be disclosed in H1 is also important.

The FY2027 full-year forecasts are revenue of ¥221,000 million, operating profit of ¥17,500 million, ordinary profit of ¥16,500 million and net profit of ¥12,000 million. As of Q1, progress was only 23.6% for revenue versus 7.1% for operating profit, clearly indicating that operating profit is lagging revenue. FY2026-H1 revenue was ¥97,992 million and operating profit was ¥4,874 million, so in this H1 it will be necessary to confirm that the company exceeds at least this level and whether the Q1 decline in profit was temporary.

Although explanations of segment-specific factors have been provided, the bridge showing how many millions of yen were deducted from company-wide operating profit by advertising expenses, hotel fixed costs, raw materials and logistics costs remains limited. In FY2027-H1, in addition to year-on-year operating profit, the operating margin and progress against the full-year forecast, disclosure of the breakdown of non-operating income and expenses would allow a more accurate assessment of the quality of the apparently growing ordinary profit.