YAMAURA CORPORATION FY2027 Q1 Earnings Report

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Executive Summary

For Q1 of the fiscal year ending April 2026, the Company reported a decline in revenue and profit, as higher SG&A expenses offset the benefits of an improved gross profit margin. Revenue was ¥8.22B (-2.5% YoY), Operating Income was ¥0.75B (-8.9%), Ordinary Income was ¥0.81B (-6.9%), and Net Income attributable to owners of the parent was ¥0.55B (-2.8%), all below the previous year. The gross profit margin improved to 18.5% from approximately 18.1% in the previous year due to an improvement in the cost-of-sales ratio. However, as SG&A expenses increased by +16.1%, the Operating Income margin declined to 9.2% from 9.8% in the previous year, with expense growth without revenue growth being the primary cause of the deterioration in profitability.

Factors Driving Performance Changes

【Revenue】Revenue declined 2.5% YoY to ¥8.22B. The core Construction Business drove overall performance with revenue of ¥7.38B (89.7% composition ratio, YoY -1.9%). The Engineering Business was nearly flat at ¥0.53B (-0.8%), while Development Business and other businesses declined sharply to ¥0.32B (-16.6%). Slowing demand in the Development Business contributed to the overall revenue decline.

【Profitability】Operating Income was ¥0.75B (YoY -8.9%). Although the gross profit margin improved to 18.5% from the previous year, SG&A expenses increased to ¥0.77B (+16.1%) despite the decline in revenue, causing the Operating Income margin to fall to 9.2% from 9.8% in the previous year. Ordinary Income was ¥0.81B (-6.9%), and Net Income was ¥0.55B (-2.8%), supported by non-operating income, primarily dividend income of ¥0.04B. No extraordinary gains or losses were recorded, and the divergence between Ordinary Income and Net Income remained within the normal range attributable to the tax burden (a reduction of approximately 32% on an effective tax rate basis). In conclusion, this was a decline in revenue and profit decision in which the increase in SG&A expenses outweighed the improvement in gross profit.

Segment Analysis

The Construction Business maintained its position as the earnings pillar, with revenue of ¥7.38B (89.7% composition ratio, YoY -1.9%), Operating Income of ¥1.09B (+2.3%), and a profit margin of 14.8%; profitability improved despite the decline in revenue. The Engineering Business recorded revenue of ¥0.53B (-0.8%) and Operating Income of ¥0.05B (+368.2%), representing a substantial increase in profit, while its profit margin also improved to 9.4%. In contrast, Development Business and other businesses reported revenue of ¥0.32B (-16.6%) and Operating Income of ¥0.003B (-89.3%, profit margin 0.9%), resulting in a significant decline in profit and creating a clear divergence among businesses. Adjustments for Company-wide expenses and other items expanded to -¥0.39B from -¥0.28B in the previous year, indicating that Company-wide expenses placed greater pressure on Operating Income than the increase in the combined reported segment results.

Key Financial Indicators

【Profitability】The Operating Income margin was 9.2% (9.8% in the previous year), the Ordinary Income margin was 9.9% (10.4% in the previous year), and the Net Income margin was 6.7% (6.7% in the previous year). The increase in SG&A expenses absorbed the improvement in the 18.5% gross profit margin, resulting in a slight decline in profit margins below the operating level. 【Cash Quality】Comprehensive Income was ¥0.74B, exceeding Net Income of ¥0.55B. The primary reason for the difference was a +¥0.20B valuation difference on securities, with valuation gains outside the core business boosting Comprehensive Income. 【Investment Efficiency】ROE remained at 2.1% (quarterly figure). With Net Assets of ¥25.79B against Total Assets of ¥36.29B, the Company has a substantial equity base, resulting in relatively low capital efficiency. 【Financial Soundness】The Equity Ratio was 71.1% (72.7% in the previous year), the Current Ratio was approximately 277%, and interest-bearing debt was nearly nonexistent. The Company therefore maintained a highly sound financial structure close to a debt-free position.

Cash Flow Analysis

Although individual disclosure of the statement of cash flows is not available, fund movements can be assessed from changes in the balance sheet. Cash and deposits increased to ¥9.58B (+8.4% from ¥8.84B at the end of the previous year), indicating an increase in available liquidity. Contract liabilities (advances received) increased to ¥4.18B (+26.1% from ¥3.31B in the previous year), indicating continued cash inflows ahead of project progress. Meanwhile, electronically recorded monetary claims increased significantly to ¥4.88B from ¥0.86B in the previous year, and costs on uncompleted construction contracts expanded to ¥1.56B (+56.0% from ¥1.00B in the previous year), indicating that working capital is expanding on both the collection and cost-investment fronts. Treasury shares increased to ¥1.98B from ¥1.18B in the previous year, suggesting that the Company continues to utilize funds for its capital policy through share repurchases.

Earnings Quality

Current-period earnings were derived primarily from recurring operating activities, with non-operating income limited to ¥0.06B (0.8% of revenue), principally consisting of dividend income of ¥0.04B, and no temporary extraordinary gains or losses recorded. The decline from Ordinary Income of ¥0.81B to Net Income of ¥0.55B was attributable to the tax burden. The effective tax rate remained at approximately the previous year's level, and qualitative distortion appears limited. From an accrual perspective, however, electronically recorded monetary claims increased substantially by +¥4.02B, while costs on uncompleted construction contracts increased by +¥0.56B, indicating an accumulation of assets prior to conversion into cash. The increase in contract liabilities (+¥0.87B) supports future progress-based revenue recognition, but monitoring is necessary because the timing of receivables collection and cost investment will affect the certainty of future profit realization.

Earnings Forecast and Guidance

Q1 progress against the full-year plan was 20.0% for Revenue (¥8.22B/¥41.13B), 20.4% for Operating Income (¥0.75B/¥3.69B), 20.6% for Ordinary Income (¥0.81B/¥3.95B), and 20.3% for Net Income (¥0.55B/¥2.71B). All were 4–5pt below the theoretical 25% level based on the simple passage of one quarter of the year. The full-year outlook incorporates YoY declines in profit, with Revenue of +1.5%, Operating Income of -13.3%, and Ordinary Income of -13.5%. As of the current quarter, no revisions have been made to the earnings or dividend forecasts. The Company appears to view progress against the plan as consistent with its assumptions regarding the construction industry's seasonal concentration of activity in the second half of the year.

Shareholder Returns

The Company's full-year dividend forecast is ¥36 per share, representing a Payout Ratio of approximately 25.1% against forecast EPS of ¥143.41 (¥36/¥143.41). Compared with the previous year's dividend of ¥13 (interim actual), the annual dividend level is trending upward, and no revision to the dividend forecast had been made as of the current quarter. Treasury shares increased to ¥1.98B from ¥1.18B in the previous year, indicating that shareholder returns are being implemented through share repurchases in addition to dividends. However, no disclosed figure is available for the Total Return Ratio combining dividends and share repurchases. Given the financial base of cash on hand of ¥9.58B and an Equity Ratio of 71.1%, the stability of dividend funding is secured.

Risk Factors

1. Business concentration risk: The Construction Business accounts for 89.7% of Revenue, indicating a high degree of dependence on a single business. Development Business and other businesses have declined sharply, with Revenue of -16.6% and Operating Income of -89.3%, and earnings volatility in non-core businesses could become a source of fluctuations in overall performance.

2. Working capital expansion risk: Electronically recorded monetary claims increased significantly from ¥0.86B in the previous year to ¥4.88B, while costs on uncompleted construction contracts increased from ¥1.00B to ¥1.56B. If the timing of collection and progress-based revenue recognition is delayed, the balance of funds relative to accumulated contract liabilities could be affected.

3. Negative cost-to-sales spread risk: SG&A expenses increased by +16.1%, while Revenue declined by -2.5%, indicating that the pace of cost growth continues to exceed revenue growth. The provision for losses on construction contracts remained small at ¥0.026B (¥0.031B in the previous year), but the room to absorb deterioration in project profitability is limited.

Industry Benchmark (Reference; Company Analysis)

Profitability and Returns

Growth and Capital Efficiency

※Source: Company compilation

Key Points from the Financial Results

1. Although the gross profit margin improved to 18.5%, the Operating Income margin declined to 9.2% as SG&A expenses increased by +16.1%. The future trend in profit margins will depend on whether the Company can absorb the increase in costs.

2. While contract liabilities (advances received) increased by +26.1%, electronically recorded monetary claims and costs on uncompleted construction contracts also expanded substantially, creating a structure in which the timing of project progress and cash collection will affect performance from the second half onward.

3. Full-year progress was approximately 20% for both Revenue and profit, below the theoretical 25% level. However, the Company has not revised its earnings or dividend forecasts, suggesting that it is managing its plan based on the construction industry's seasonal concentration of activity in the second half of the year.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,430–¥1,515 at ±1% for the cost of equity, and ¥1,470–¥1,474 at ±0.1 for ω.

Notes:

• Net Assets at the end of the quarter are used (there is a timing gap relative to the full-year forecast).
• As Net Assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not forecast or guarantee future share prices)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings briefing data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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