SAAF Holdings (Securities Code: 1447) Q1 FY2027 Earnings Deep Dive

SAAF Holdings' Q1 FY2027 (April 1, 2026 – June 30, 2026) financial results demonstrated significant profitability improvements across all segments, led by its core construction and civil engineering business. Notably, operating profit, a key indicator of core business earnings power, tripled year-on-year to 240 million yen .

Meanwhile, the company reported a net loss attributable to owners of the parent of 1.299 billion yen , primarily due to one-off impairment losses on equity-method affiliates and special investigation expenses. However, this bottom-line loss is driven by non-cash expenditures and non-recurring factors; the company’s underlying core earnings power (cash-generating ability) remains exceptionally robust .

This report provides a multi-faceted analysis of the company’s performance, segment-specific growth drivers, financial position, and the growth narrative toward the "MTG2028" mid-term management plan, based on 10 key topics derived from the earnings materials.

---

1. Earnings Overview: Analysis of Operating Profit Surge and Net Loss Background

Consolidated results for the first quarter showed net sales of 6.668 billion yen (down 7.0% YoY), operating profit of 240 million yen (up 198.9% YoY, approximately 3x), and ordinary profit of 196 million yen (up 110.8% YoY, approximately 2.1x). Excluding the impact of the business divested in the previous fiscal year (i-need), the company achieved actual revenue growth on a comparable basis.

Slide Commentary: Core Business Growth vs. Extraordinary Losses

The slide above clearly illustrates the dual structure of this quarter's results: "Core business profitability improvement" vs. "Impact of one-off extraordinary losses."

• Steady Core Expansion : Operating profit surged from 80 million yen in the same period last year to 240 million yen. This was primarily driven by a dramatic improvement in construction-related business margins and a reduction in SG&A expenses (down 164 million yen YoY) through the promotion of internal DX.
• Structure of One-off Extraordinary Losses : The primary factors behind the 1.299 billion yen net loss were the Schoo stock impairment (1.018 billion yen) and special investigation expenses (339 million yen) . The Schoo impairment is an accounting valuation loss and a non-cash expenditure . The special investigation expenses are also temporary and will not recur in subsequent periods.

Therefore, it can be concluded that the impact on the company’s essential operating cash flow and mid-to-long-term earnings foundation is minimal .

---

2. Cash Flow and Balance Sheet Soundness

Despite the one-off net loss, the company’s actual cash position and financial foundation remain solid.

• Operating Cash Flow : Despite the payment of special investigation expenses (339 million yen), the company generated a positive cash flow of 1.316 billion yen (compared to 2.069 billion yen in the same period last year) due to progress in accounts receivable collection.
• Free Cash Flow : The company secured a positive free cash flow of 1.305 billion yen , demonstrating a structure where cash generated from operations is effectively retained.
• Asset/Liability Trends : On the balance sheet, cash and deposits increased by 1.041 billion yen to 4.478 billion yen due to progress in accounts receivable collection. While net assets decreased due to the impact of the Schoo impairment (383 million yen) and dividend payments, the equity ratio remains at 10.4% .

---

3. Segment Trends: Core Construction and Civil Engineering Business Drives Turnaround

In the first quarter, all segments within the group saw year-on-year profit improvements (total improvement of +517 million yen). In particular, the return to profitability of the core construction/civil engineering and system development businesses strongly boosted overall company performance.

Segment	Net Sales (Million JPY)	YoY Change	Segment Profit (Million JPY)	YoY Improvement	Key Factors/Topics
Consulting	334	94.8%	▲19	+52	Growth in priority areas (disaster prevention/education), AI-driven productivity
System Development	1,268	97.6%	49	+71	Increased shipments of spectrometer boards due to AI data center demand
Human Resources	571	100.6%	223	+15	Strong demand for teacher dispatch, increase in instructor acquisition
Construction/Civil Eng.	4,494	107.2%	330	+358	Gross margin improvement, back-office efficiency, strong orders from major contractors

Slide Commentary: V-shaped Recovery Factors in Construction/Civil Engineering

The slide above highlights the dramatic profitability improvement in the construction and civil engineering business , the group's largest segment.

• Something : Achieved a turnaround to profitability from a loss in the same period last year through thorough gross margin improvement and fixed cost reduction. The "Management Reform Project" aimed at improving back-office productivity is yielding results.
• GIR / Something Re : Sales remained steady at 110.6% YoY, driven by deepening relationships with key clients and a focus on completion guarantee businesses.
• Earth Prime / U-Shin / Tomei : All group subsidiaries achieved 104%–119% revenue growth YoY, supported by expanded transactions with major general contractors, demand for foundation work for high-rise condominiums in urban areas, and railway-related projects.

In an environment of rising material and labor costs, the implementation of price pass-throughs and the systemization of process management have led to significant margin expansion.

---

4. Full-Year Forecast and "MTG2028" Mid-term Management Plan Roadmap

Based on Q1 progress, the company has maintained its full-year consolidated earnings and dividend forecasts for the fiscal year ending March 2027.

• Full-Year Sales Forecast : 28.327 billion yen (down 4.2% YoY, due to the reduction/divestment of unprofitable businesses)
• Full-Year Operating Profit Forecast : 1.2 billion yen (up 9.8% YoY, expected to reach a record high )
• Q1 Progress : Against the 1.2 billion yen full-year operating profit target, the company achieved 240 million yen in Q1 ( 20.0% progress rate ). This is a very strong start, given the company's historical tendency toward second-half weighting.

Slide Commentary: Mid-to-Long-Term Targets and Vision (through FY2032)

The slide above provides an overview of the quantitative targets for the "MTG2028" mid-term management plan and the long-term vision for the fiscal year ending March 2032.

• MTG2028 Final Year (FY2029) : Targets 35.3 billion yen in sales and 2.0 billion yen in operating profit . The strategy involves raising the growth rates of core businesses (construction, system development, consulting) following the consolidation of unprofitable operations.
• Long-term Vision (FY2032) : Aims for 50 billion yen in sales, 3.5 billion yen in operating profit (7.0% operating margin), and 21.0% ROE .
• Segment Growth Scenarios : The plan outlines expanding the construction business to 27 billion yen, system development to 11.3 billion yen, and consulting to 9.1 billion yen, ensuring high profit margins across all divisions.

---

5. Progress of the "Four No. 1 Class" Strategy

Key achievements in the first quarter within the company’s niche-top areas ("Four No. 1 Class") are as follows:

1. Local Government Consulting : Subsidiary Mirai was selected as the operator for Nara Prefecture’s "Online Learning Promotion Project." The project has moved into the execution phase, supporting DX and reskilling for local governments using Schoo’s educational platform.
2. On-site IoT Systems : The "Mimawari Denshobato" (disaster risk prediction system) won the Grand Prize at the Japan Resilience Awards 2026 . It achieved over 300% of its Q1 sales target , with the rollout of new features (lightning detection/cloud forecasting) proceeding smoothly.
3. Educational HR Dispatch : Subsidiary IST launched a new organizational structure, expanding support for on-site teachers, for whom demand is tight nationwide.
4. Geological Database : Subsidiary Earth Prime began developing a data infrastructure to facilitate the utilization of geological data.

---

6. Summary and Outlook

While SAAF Holdings reported a net loss in its Q1 FY2027 results due to extraordinary accounting losses, the core operating profit reached record-high levels, demonstrating exceptional strength .

Structural reforms—including DX promotion, price revisions, and a focus on high-value-added projects—are beginning to bear fruit in the face of external challenges such as rising material costs and labor shortages. Moving forward, the focus will be on whether the company can maintain these profitability improvements and leverage its unique strengths, including the "Four No. 1 Class" strategy, to achieve the "MTG2028" mid-term management plan.