SECOM Q1 FY2027: Record Revenue, but Net Profit Falls 3.4%

SECOM achieved second consecutive record quarterly revenue of ¥298.4 billion (up 3.6% year on year) for the first quarter of FY2027 (April-June 2026). Operating profit rose 3.9% to ¥33.4 billion, driven by improved profitability in security services and disaster prevention. However, net profit attributable to owners of the parent fell 3.4% to ¥24.0 billion, mainly due to a ¥1.7 billion decline in investment partnership income and higher natural disaster-related insurance losses.

Quarterly comprehensive income surged 94.9% to ¥36.3 billion, reflecting improved valuation gains on securities.

Japan's domestic economy showed signs of recovery in capital spending and personal consumption, helped by improving employment and income conditions, although risks from Middle East tensions and financial market volatility persist. Under its long-term vision of 'proactive peace of mind' and medium-term roadmap, SECOM continued to promote its 'AZ' security system for businesses and 'SECOM Home Security NEO' for households, steadily building recurring contract revenue.

Segment revenue and operating profit for the quarter are shown in the table below.

In the core Security Services segment, revenue grew 2.1% to ¥164.0 billion, and operating profit increased 2.6% to ¥31.9 billion, supported by stable demand for online security systems and contributions from a cash collection subsidiary. The company continues to strengthen proposals for high-value-added systems such as the face-recognition-enabled 'Home Security NEO'.

The Disaster Prevention segment saw a 13.9% revenue jump to ¥40.0 billion, with operating profit surging 411.0% to ¥1.2 billion, thanks to strong demand for fire alarm and extinguishing equipment and improved cost rates. Note that this business is affected by construction industry cycles, with earnings concentrating toward the fiscal year-end.

Medical Services revenue rose 5.4% to ¥23.2 billion, and operating profit gained 5.8% to ¥1.6 billion, reflecting robust medical device sales and growth at an Indian hospital subsidiary.

Insurance revenue increased 8.2% to ¥14.8 billion on solid fire and auto insurance sales, but operating profit fell 24.3% to ¥2.3 billion due to higher claims from natural disasters.

Geospatial Information Services revenue grew 6.8% to ¥9.9 billion, yet it posted an operating loss of ¥1.5 billion (versus a ¥1.7 billion loss a year earlier), as public-sector orders remain concentrated in the second half.

BPO/ICT revenue edged down 1.6% to ¥31.7 billion, reflecting a pullback from last year's special server demand and lower sales at BPO subsidiaries, but operating profit climbed 21.1% to ¥2.3 billion due to cost improvements.

Total assets at the end of the quarter stood at ¥2,178.6 billion, down 2.3% from the previous fiscal year-end, mainly due to a seasonal 34.9% plunge in trade receivables and contract assets to ¥117.7 billion. Current assets dropped 6.5% to ¥917.5 billion, while fixed assets increased 1.0% to ¥1,261.1 billion, partly from higher investment securities. Liabilities decreased 5.8% to ¥688.3 billion on lower notes payable and income taxes payable. Net assets were ¥1,490.3 billion, affected by share buybacks and an increase in unrealized gains on securities.

The company resolved in May 2026 to buy back its own shares and acquired ¥22.4 billion during the quarter, lifting accumulated treasury stock to ¥259.0 billion and boosting net assets per share. While a cash-flow statement was not prepared, depreciation and amortization expenses totaled ¥17.3 billion (including ¥1.7 billion in goodwill amortization), both up year on year, indicating ongoing growth investment through capex and M&A.

SECOM plans to raise its annual dividend by ¥20 to ¥120 per share (interim ¥50, year-end ¥60), signaling stronger shareholder returns.

SECOM's quarterly report flags risks including domestic and global economic conditions, market trends, regulatory changes, disasters, product recalls, and other contingencies. In Q1, natural disaster losses in the insurance business weighed on profits, underscoring the need to monitor climate-related risks. The Geospatial Information Services segment continues to post chronic losses due to the seasonal concentration of government demand; expanding private-sector and overseas business is essential for a turnaround. Additionally, the decline in investment partnership income highlights the sensitivity of financial earnings to market downturns, reinforcing the importance of strengthening core operating profit.

SECOM left its FY2027 full-year consolidated forecast unchanged from the May 12, 2026 announcement. It projects revenue of ¥1,313.5 billion (up 4.5%), operating profit of ¥165.5 billion (up 3.2%), and net profit of ¥105.8 billion (up 6.1%).

First-quarter progress against these targets is on track, with revenue at 22.7% and operating profit at 20.2%, and the seasonal concentration of disaster prevention earnings in the second half provides confidence in achieving the full-year figures.