SECOM Lifts Q1 Operating Profit 3.9% on Record ¥298.5 Billion Revenue, but Net Profit Slips 3.4%

A record first quarter at the top line, with operating profit keeping pace

SECOM CO., LTD. (TSE: 9735), the Japanese group whose businesses span security services, fire protection, medical services, insurance, geospatial information and BPO & ICT, published consolidated results for the first quarter of the fiscal year ending March 2027 — April 1 to June 30, 2026 — on August 7, 2026, under Japanese GAAP. Revenue rose 3.6% to ¥298,453 million and operating profit 3.9% to ¥33,466 million, while ordinary profit fell 0.7% to ¥39,075 million and profit attributable to owners of the parent fell 3.4% to ¥24,096 million, or ¥59.81 per share against ¥60.24. The company states that first-quarter revenue was the highest on record. Its shares are listed on the Tokyo Stock Exchange.

Cost of sales rose 3.1% to ¥204,245 million, slightly slower than revenue, so gross profit grew 4.7% to ¥94,207 million and the gross margin edged up from 31.2% to 31.6%. Selling, general and administrative expenses grew faster, by 5.2% to ¥60,740 million; salaries and allowances, the largest single item, rose from ¥21,246 million to ¥22,241 million. That absorbed most of the gross-margin gain, and the operating margin stayed at 11.2% in both periods. The company attributes the revenue gain chiefly to security services and fire protection, and the operating-profit gain to the same two businesses, partly offset by lower profit in insurance.

Below the operating line, investment-partnership gains fell by ¥1,758 million

Non-operating income fell from ¥8,889 million to ¥6,723 million. The filing names the main cause: gains on investment partnerships, in the United States and elsewhere, dropped from ¥4,739 million to ¥2,981 million. Equity-method investment income also declined, from ¥2,288 million to ¥1,439 million. Non-operating expenses shrank from ¥1,774 million to ¥1,115 million, helped by the absence of the prior year's ¥645 million foreign-exchange loss, but not by enough to offset the lower income, so ordinary profit slipped 0.7% even as operating profit rose.

Extraordinary items were small on both sides: ¥164 million of gains, mainly on sales of investment securities, against ¥314 million of losses, chiefly on disposals of fixed assets. Pre-tax profit was ¥38,925 million against ¥39,183 million. Total income taxes rose from ¥12,030 million to ¥12,919 million, lifting the tax burden from about 30.7% to 33.2% of pre-tax profit; the filing does not explain the increase. Profit attributable to non-controlling interests fell from ¥2,212 million to ¥1,909 million, leaving net profit attributable to owners 3.4% lower at ¥24,096 million.

Earnings per share fell only 0.7%, because the average number of shares outstanding dropped from 414.03 million to 402.85 million as the treasury-stock holding grew. Comprehensive income nearly doubled, to ¥36,391 million from ¥18,673 million, on a ¥10,745 million increase in unrealised gains on other securities and a positive swing in foreign-currency translation adjustments.

Security services earned the most; fire protection moved the most

Security services, by far the largest segment, grew external revenue 2.1% to ¥164,040 million and segment profit 2.6% to ¥31,942 million. The filing credits steady sales of centralized (online) security systems for businesses and homes, and higher revenue at a subsidiary that mainly provides cash collection and delivery services. During the quarter the company added camera-integration features to its AZ system security for business premises, and pushed home systems including SECOM Home Security NEO, which carries facial recognition.

Fire protection revenue rose 13.9% to ¥40,038 million on higher sales of fire alarm and extinguishing systems, and segment profit jumped 411.0% to ¥1,282 million from ¥251 million, which the company attributes to a lower cost ratio on more profitable projects. The filing cautions that this business depends heavily on the construction industry and that its earnings tend to concentrate toward the fiscal year-end.

Medical services revenue rose 5.4% to ¥23,289 million, on strong sales of medical equipment and higher revenue at a general-hospital operator in India, and segment profit rose 5.8% to ¥1,678 million. Insurance revenue grew 8.2% to ¥14,893 million on steady sales of fire and auto policies, but segment profit fell 24.3% to ¥2,302 million because of higher losses from natural disasters.

Geospatial information services grew revenue 6.8% to ¥9,923 million and narrowed its operating loss to ¥1,565 million from ¥1,753 million; its main customers are government agencies whose deliveries fall mostly at the end of March, so its earnings are also back-loaded. BPO & ICT revenue fell 1.6% to ¥31,749 million, against a prior-year quarter that included strong sales of servers and other equipment and on lower revenue at its BPO subsidiary TMJ, yet segment profit rose 21.1% to ¥2,314 million on a lower cost ratio and reduced SG&A. Other businesses, which include real-estate leasing and building-equipment work, posted revenue of ¥14,517 million (−2.1%) and profit of ¥2,137 million (+9.8%). Corporate expenses not allocated to segments rose from ¥5,695 million to ¥6,246 million.

Receivables unwound after year-end, and ¥22,417 million went on buybacks

Total assets fell 2.3% to ¥2,178,656 million from March 31, 2026. The largest move was in notes and accounts receivable and contract assets, down ¥63,209 million to ¥117,716 million. Liabilities fell ¥42,113 million to ¥688,331 million, led by lower income taxes payable (¥10,641 million from ¥32,156 million), trade payables and the bonus provision, while long-term borrowings rose from ¥9,648 million to ¥16,800 million. Net assets were ¥1,490,325 million, 0.6% lower, and the equity ratio rose from 58.9% to 60.0%.

The main reason net assets fell despite the quarter's profit is share repurchases. Under a board resolution of May 12, 2026, SECOM acquired 3,510,600 of its own shares, increasing treasury stock by ¥22,417 million to ¥259,088 million. Retained earnings rose by ¥3,982 million, and unrealised gains on other securities added ¥10,491 million. The company did not prepare a quarterly cash-flow statement; depreciation for the quarter was ¥17,391 million and goodwill amortization ¥1,757 million.

Guidance and a ¥120 dividend left unchanged

SECOM left its forecasts unchanged from the figures published on May 12, 2026. For the full year to March 2027 it expects revenue of ¥1,313,500 million (+4.5%), operating profit of ¥165,500 million (+3.2%), ordinary profit of ¥176,000 million (−3.4%) and net profit attributable to owners of ¥105,800 million (−6.1%), or ¥263.57 per share. For the first half it projects revenue of ¥617,000 million (+4.0%) and operating profit of ¥68,500 million (+1.5%). The first quarter delivered 22.7% of the full-year revenue target and 20.2% of the operating-profit target.

The dividend forecast is also unchanged: ¥60 at the interim and ¥60 at the year-end, ¥120 for the year, against ¥100 (¥50 and ¥50) for the year to March 2026.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.