| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue | ¥1977.4B | ¥2008.2B | -1.5% |
| Operating Income | ¥38.4B | ¥41.1B | -6.6% |
| Ordinary Income | ¥37.6B | ¥37.9B | -0.8% |
| Net Income | ¥7.0B | ¥11.5B | -39.2% |
| ROE | 2.4% | 3.4% | - |
For the fiscal year ended May 2026, Revenue was ¥1,977.4B (YoY -¥30.8B, -1.5%), Operating Income was ¥38.4B (YoY -¥2.7B, -6.6%), Ordinary Income was ¥37.6B (YoY -¥0.3B, -0.8%), and Net Income attributable to owners of the parent was ¥7.0B (YoY -¥4.5B, -39.2%), resulting in year-on-year declines in both top-line and profits. The top-line decline was mainly driven by a contraction in the core Residential Business (-7.0%), partially offset by growth in the Real Estate Business (+14.8%). The Residential Business swung to an operating loss of ¥10.7B, and special losses of ¥17.3B (including impairment losses of ¥15.4B) substantially compressed Net Income. Gross margin deteriorated to 24.2% (approximately -1.3pt YoY) and operating margin fell to 1.9% (prior year 2.0%), indicating continued weakness in profitability.
[Revenue] Revenue of ¥1,977.4B (-1.5%) was mainly driven down by the Residential Business revenue of ¥1,361.3B (-7.0%). Custom-built housing revenue was ¥1,244.9B (prior year ¥1,335.3B), continuing a negative trend as a weak order environment and lower handover volumes weighed on sales. Conversely, the Real Estate Business achieved double-digit growth at ¥549.3B (+14.8%), led by detached-house subdivisions at ¥476.7B (prior year ¥418.1B). Other segments were ¥158.8B (-6.1%), Finance ¥9.7B (+5.3%), Energy ¥8.0B (-3.5%) — all small in scale with limited contribution to consolidated results. Revenue composition was Residential 68.8%, Real Estate 27.8%, Others 3.4%, indicating continued high dependence on the Residential Business and sensitivity of consolidated results to its operating conditions.
[Profitability] Cost of goods sold was ¥1,498.3B (cost ratio 75.8%), up slightly YoY, and gross profit was ¥479.1B (gross margin 24.2%), down from ¥511.05B (25.5%) in the prior year, a decline of about 1.3pt. Rising material and labor costs materially impacted results, and lag in passing through price increases pressured margins. Selling, general and administrative expenses were ¥440.6B (SG&A ratio 22.3%), down from ¥469.9B (23.4%) prior year, but fixed-cost absorption was insufficient, resulting in Operating Income of ¥38.4B (operating margin 1.9%) below the prior year ¥41.1B (2.0%). By segment, Residential recorded an operating loss of ¥10.7B (prior year operating profit ¥3.3B), a significant deterioration, while Real Estate generated Operating Income of ¥35.8B (+48.1%), supporting consolidated profits. Non-operating expenses included higher interest expenses of ¥3.3B (prior year ¥2.0B), increasing financing burden; despite FX gains/losses volatility, Ordinary Income was ¥37.6B (-0.8%), holding to a marginal decline. Special losses totaled ¥17.3B (prior year ¥11.2B), primarily impairment losses of ¥15.4B (prior year ¥9.7B), reflecting asset quality issues in the Residential Business and representing non-recurring items. Profit before tax was ¥22.0B (prior year ¥27.9B, -21.2%); after deducting income taxes of ¥9.7B, Net Income attributable to owners of the parent was ¥7.0B (-39.2%). In conclusion, reduced revenue and profits, combined with Residential losses and one-off charges, substantially compressed final profit.
The Residential Business reported Revenue of ¥1,361.3B (-7.0%) and an operating loss of ¥10.7B, with a margin of -0.8%, turning to a deficit. Declining orders for custom homes and upward cost pressure affected results, and recognition of losses on unprofitable projects further pressured profitability. The Real Estate Business posted Revenue of ¥549.3B (+14.8%) and Operating Income of ¥35.8B (+48.1%), maintaining a high margin of 6.5%. Progress in completion and handovers of detached-house subdivisions expanded both revenue and gross profit, effectively driving consolidated Operating Income. Others recorded Revenue of ¥158.8B (-6.1%) and Operating Income of ¥8.1B (-10.6%), margin 5.1%; Finance posted Revenue ¥9.7B (+5.3%) and Operating Income ¥2.5B (+64.7%), margin 26.1%; Energy posted Revenue ¥8.0B (-3.5%) and Operating Income ¥2.5B (-6.4%), margin 31.0% — all high-margin but small-scale. Large margin disparities across segments mean improving Residential profitability is the top priority for the next fiscal year.
[Profitability] Operating margin 1.9% (prior year 2.0%) and Net margin 0.4% (prior year 0.6%) both declined. Gross margin was 24.2%, approximately -1.3pt from 25.5% in the prior year, with Residential cost overruns dragging down consolidated margins. ROE was 2.4% (prior year 4.1%), below the company’s historical performance, reflecting a low-return profile. ROA was 0.8% (Ordinary Income basis 4.2%, prior year 4.2%), roughly flat.
[Cash Quality] Operating Cash Flow (OCF) was ¥9.3B, 1.3x Net Income of ¥7.0B on a cash basis, but down substantially -58.8% from prior-year OCF of ¥22.5B. The primary cause was an increase in inventories (work-in-progress real estate) of ¥57.4B, which absorbed working capital. OCF/EBITDA (OCF divided by pre-working-capital-change operating cash subtotal) was 0.4x, low, indicating weakened cash conversion efficiency due to inventory build-up.
[Investment Efficiency] Total asset turnover was 2.3x/year (prior year 2.2x), remaining at a high level and indicating solid asset efficiency. Capital expenditures were ¥10.0B, 42% of depreciation expense of ¥23.7B, showing restrained investment with focus on maintenance and renewal.
[Financial Soundness] Equity ratio was 34.3% (prior year 37.1%), declining, and debt-to-equity ratio rose to 1.9x (prior year 1.7x). Current ratio and quick ratio were both 127.5%, securing short-term liquidity, but the maturity profile shortened with short-term borrowings ¥123.7B (prior year ¥75.3B) vs. long-term borrowings ¥14.6B (prior year ¥79.2B), increasing refinancing risk. Cash and deposits of ¥211.8B covered short-term borrowings by 1.7x, providing some buffer. EBIT interest coverage was 11.7x, indicating adequate interest-paying ability, but interest expenses rose to ¥3.3B (prior year ¥2.0B), increasing financing burden.
OCF was ¥9.3B (prior year ¥22.5B, -58.8%). The subtotal before working capital changes was ¥23.3B (prior year ¥49.2B), with major items being inventory increase -¥57.4B (accumulation of work-in-progress real estate), increase in trade payables +¥3.4B, increase in accrued expenses +¥6.2B, and increase in accrued taxes +¥4.8B. Corporate tax payments of -¥11.8B also absorbed cash. Investing cash flow was -¥11.6B, mainly capital expenditures of -¥10.0B. Free Cash Flow was OCF ¥9.3B + Investing CF -¥11.6B = -¥2.3B, turning negative, indicating reliance on external financing to cover dividends. Financing cash flow was -¥96.2B: net increase in short-term borrowings ¥48.4B (prior year ¥15.7B) and long-term borrowings procured ¥27.9B were offset by long-term borrowings repayments -¥115.8B and dividend payments -¥56.5B, leading to net cash outflows. As a result, cash and deposits decreased by ¥98.2B from ¥311.0B to ¥211.8B. Weak OCF and substantial dividend burden are straining liquidity; normalizing inventory turnover and restoring profitability next fiscal year are important for funding stability.
Against Ordinary Income of ¥37.6B, recognition of special losses of ¥17.3B (impairment losses ¥15.4B, loss on retirement of fixed assets ¥0.8B, etc.) compressed Profit before tax to ¥22.0B, and Net Income of ¥7.0B was heavily influenced by one-off factors. The impairments reflect asset quality issues in the Residential Business and are non-recurring in nature, but given a prior-year impairment of ¥9.7B, there is concern that profitability weakness may lead to asset value deterioration. Non-operating income was ¥4.8B, including FX gains of ¥1.1B, while non-operating expenses were ¥5.7B led by interest expenses of ¥3.3B (prior year ¥2.0B). Rising interest burden reflects the shortening of debt maturities and higher interest rates, posing risk to profits depending on future financial conditions. Comprehensive income was ¥10.9B, exceeding Net Income of ¥7.0B; FX translation adjustments -¥1.4B and valuation differences on available-for-sale securities -¥0.1B had some impact, but total did not diverge greatly from realized profits. The accrual ratio ((Net Income - OCF)/Total Assets) was -0.3%, small, indicating conservative profit recognition. However, OCF exceeding Net Income was driven by inventory increases that absorbed cash, so cash-based earnings quality is not necessarily strong. Ordinary Income of ¥37.6B signals pre-impairment core earning power, and focus should be on core earnings excluding non-recurring items.
The company’s plan forecasts Full Year Revenue ¥230.0B (YoY +16.3%), Operating Income ¥7.5B (+95.2%), Ordinary Income ¥6.7B (+78.3%) — representing significant projected growth. Progress toward the fiscal year targets based on current results stands at: Revenue 86.0%, Operating Income 51.2%, Ordinary Income 56.1%, meaning achievement of full-year targets assumes a substantial acceleration in H2. Key to attainment are profitability improvements in the Residential Business (elimination of the operating loss) and planned handovers of real estate inventory; measures include penetration of price revisions, strengthened construction cost controls, and higher order prices. Work-in-progress real estate inventory at fiscal year-end was ¥201.8B, up substantially from ¥102.9B in the prior year, so future completions and handovers should generate revenue and gross profit; however, delayed turnover or market deterioration could pose risks. Rising interest burden may also depress profits, so lengthening the debt maturity profile and fixing interest rates are desirable. The guidance is aggressive; if Residential profitability recovery and inventory turnover normalization do not materialize, the probability of achieving targets is low.
The year-end dividend is ¥125 per share, totaling approximately ¥36.3B (calculated using outstanding shares 29,456k - treasury shares 468k = 28,988k shares). The payout ratio relative to Net Income of ¥7.0B is approximately 518%, extremely high. The prior year also maintained a dividend of ¥125/share, totaling about ¥36.3B, suggesting a stable dividend policy. Free Cash Flow was negative at -¥2.3B, so dividends were not covered by internal funds and were financed through cash reserves drawdown and borrowings. Maintaining this year’s dividend reflects a shareholder-friendly stance, but sustainability is questionable. Recovery in earnings and strengthened OCF next fiscal year are prerequisites for a stable dividend policy. No share buybacks were disclosed; total return ratio equals the payout ratio. Given the dividend yield and total dividend amounts trend, the company appears committed to shareholder returns, but monitoring alignment with profit and cash flow levels is necessary.
Risk of continued Residential Business losses: An operating loss of ¥10.7B indicates material deterioration in profitability. Continued weak order environment, rising material and labor costs, and delays in price pass-through could entrench a loss-making structure. Given the prior-year operating profit of ¥3.3B, the rapid deterioration warrants caution, and there is risk of additional losses from unprofitable projects or repeated impairments. Residential revenue comprises 68.8% of total, so delayed recovery in this segment could materially impact consolidated performance.
Risk from short-term debt dependence and rising interest burden: Short-term borrowings ¥123.7B vs. long-term borrowings ¥14.6B result in a short-term debt ratio of 89.4% and a concentration of maturities in the short term, increasing refinancing risk. Interest expense rose to ¥3.3B (prior year ¥2.0B), +65% YoY; in a further rate-rise scenario interest payments would increase further. While EBIT interest coverage of 11.7x indicates near-term ability to service interest, persistent weak operating profits could raise the burden and constrain financial flexibility.
Risk of delayed turnover of real estate inventory: Work-in-progress inventory for sale is ¥201.8B, +96.1% YoY, and the piling up of development projects is heavily pressuring working capital. While future completions and handovers will provide revenue sources, a market downturn or weak sales could cause inventory stagnation and increase the risk of valuation losses or impairments. OCF declined -58.8% YoY due to inventory increases; if inventory turnover normalization is delayed, liquidity will be further strained. Advances received (contract liabilities) of ¥96.0B provide some buffer but fluctuate with project progress, so delays in starts or handovers could significantly affect cash flow.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.9% | 5.5% (3.5%–7.2%) | -3.6pt |
| Net Margin | 0.4% | 3.5% (2.5%–4.4%) | -3.2pt |
Profitability is materially below the industry median; both operating and net margins rank in the lower quartile. The Residential Business turning to a loss and one-off charges significantly depressed margins.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.5% | 9.8% (-2.1%–15.1%) | -11.3pt |
Growth lags the industry median by roughly 11pt, placing the company in the lower ranks amid a declining revenue trend. Weak Residential orders are the primary driver; Real Estate growth has not fully offset the decline.
※Source: Company compilation
Improving profitability and liquidity is the top priority. With operating margin at 1.9% and net margin at 0.4%, profitability is below industry peers, and OCF declined -58.8% YoY, turning Free Cash Flow negative. Eliminating the Residential Business loss (through price revisions and strict cost control) and normalizing working capital via planned handovers of work-in-progress real estate are prerequisites for meeting next year’s guidance and sustaining dividends. Addressing rising interest burden by correcting short-term borrowing dependence (lengthening maturities) would improve financial stability.
Segment structure is shifting. While Residential (68.8% of revenue) turned to a loss, Real Estate (27.8%) generated Operating Income of ¥35.8B and drove consolidated profits. Attention will focus on whether restoring Residential profitability and sustaining Real Estate growth can lift operating margin into the 3% range. The possibility of recurring non-recurring losses (impairment ¥15.4B) and the need to monitor asset quality are important, as prolonged profitability weakness can erode asset values.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings disclosure data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial statements. Investment decisions are your own responsibility; please consult a professional advisor as necessary before making any investment.