| Metric | This Period | Year-Ago Period | YoY |
|---|---|---|---|
| Revenue | ¥21460.5B | ¥20263.9B | +5.9% |
| Operating Income | ¥1718.1B | ¥946.1B | +81.6% |
| Ordinary Income | ¥1671.5B | ¥1012.3B | +65.1% |
| Net Income | ¥1233.4B | ¥755.9B | +63.2% |
| ROE | 9.1% | 5.9% | - |
FY2026 Q3 results delivered revenue of ¥21,460.5B (YoY +¥1,196.6B +5.9%), operating income of ¥1,718.1B (YoY +¥772.0B +81.6%), ordinary income of ¥1,671.5B (YoY +¥659.2B +65.1%), and parent-company-shareholder net income of ¥1,222.1B (YoY +¥476.0B +64.0%), achieving both revenue and profit growth. Revenue has risen for three consecutive periods, and operating income nearly doubled from the prior year. Operating margin improved to 8.0% (up 3.3pt from 4.7% a year earlier), reaching the highest level in the past five periods. EPS ¥261.58 increased from ¥157.66 a year earlier (+65.9%), indicating a pronounced structural improvement in profitability.
Revenue was led by completed-construction revenue of ¥1,938.8B, complemented by development business, etc., of ¥207.3B. By segment, the Building (Architecture) Business recorded ¥8,668.6B (share 40.4%) — the largest and up +15.6% YoY; the Civil Engineering Business reported ¥3,144.4B (share 14.7%) — up +5.4% YoY; and Overseas Affiliates recorded ¥7,425.4B (share 34.6%) — down -3.7% YoY, showing regional variation. Gross profit margin improved to 13.7% (up 3.3pt from 10.4% a year earlier), contributed by rigorous margin management and an improved project mix (shift to higher-margin building projects and margin increases in civil engineering). Selling, general and administrative expenses (SG&A) were ¥1,220.7B, representing 5.7% of revenue, a 0.1pt improvement from 5.8% year-ago, and SG&A growth lagged revenue growth, unleashing operating leverage. Operating income of ¥1,718.1B was driven by large increases in Building ¥643.2B (margin 7.4%) and Civil Engineering ¥573.8B (margin 18.2%), with Development Business ¥94.1B (margin 19.0%) and Domestic Affiliates ¥205.6B (margin 7.4%) also holding firm. The gap between ordinary income and operating income was -¥46.6B (-2.7%), with interest income ¥139.9B and dividend income ¥66.0B partially offsetting interest expense ¥184.8B, and equity-method investment gains ¥2.0B contributing slightly. Extraordinary gains ¥141.6B (mainly ¥138.4B from gains on sale of investment securities) boosted profit before taxes; after income taxes ¥570.9B, net income reached ¥1,233.4B. Excluding non-controlling interests of ¥11.3B, parent-company-shareholder net income was ¥1,222.1B, yielding a net margin of 5.7%. Comprehensive income ¥1,458.9B exceeded net income by ¥225.5B, mainly due to valuation gains on securities of ¥376.2B partially offset by foreign currency translation adjustments of -¥134.9B. Regarding earnings quality, the probability that Operating Cash Flow (OCF) will exceed net income is high, and core recurring income is project-based, indicating high sustainability. In conclusion, the company achieved revenue and profit growth driven by margin improvement.
The Civil Engineering Business delivered revenue of ¥3,144.4B (share 14.7%) and operating income of ¥573.8B, with the highest margin among the five segments at 18.2%. The Building Business generated ¥8,668.6B (share 40.4%) — the largest scale — and operating income ¥643.2B with a margin of 7.4%, representing a substantial YoY margin improvement. Development Business, etc., recorded revenue of ¥494.1B (share 2.3%) and operating income ¥94.1B (margin 19.0%), maintaining high margins. Domestic Affiliates reported revenue ¥2,797.4B (share 13.0%) and operating income ¥205.6B (margin 7.4%), steady performance. Overseas Affiliates had revenue ¥7,425.4B (share 34.6%) — the second-largest share — but operating income ¥192.2B and margin 2.6%, indicating lower profitability versus other segments, influenced by FX fluctuations and country risk. The core business is Building, accounting for 40.4% of revenue, while profit contribution is led by Building ¥643.2B and Civil Engineering ¥573.8B, with Development Business’ high margin lifting overall profitability. Segment margin dispersion reaches up to 15.6pt (Civil Engineering 18.2% vs. Overseas 2.6%), and improving profitability in overseas operations is a key lever for future margin enhancement.
Profitability: ROE 9.1% (exceeding the prior three-period average estimate range of 6–7%), operating margin 8.0% (improved +3.3pt from 4.7% a year earlier), and net margin 5.7% (improved +2.0pt from 3.7% a year earlier), indicating marked improvement. Interest coverage ratio 9.30x (Operating Income ¥1,718.1B ÷ Interest Expense ¥184.8B) shows ample interest-bearing capacity. Cash quality: Cash and deposits ¥3,561.9B, short-term debt coverage 0.81x (Cash ¥3,561.9B ÷ short-term interest-bearing debt ¥4,402.4B [short-term borrowings ¥4,402.4B + CP ¥1,050B + bonds maturing within 1 year ¥200B]), so cash does not fully cover short-term debt and refinancing operations are a premise. Investment efficiency: Total asset turnover 0.60x (Revenue ¥21,460.5B ÷ Total Assets ¥35,764.9B), reflecting capital intensity of the construction industry. Financial soundness: Equity ratio 37.8% (up +0.8pt from 37.0% a year earlier), current ratio 131.0% (current assets ¥22,007.8B ÷ current liabilities ¥16,795.2B), debt-to-equity 1.65x (debt ¥22,262.3B ÷ equity ¥13,502.6B), Debt/Capital ratio 34.4% (interest-bearing debt ¥7,070B ÷ total capital ¥20,573B), indicating solvency within a healthy range, though short-term debt ratio 62.3% and high short-term funding dependence are monitoring items.
Cash and deposits increased slightly to ¥3,561.9B (YoY +¥17.1B), suggesting operating profit growth contributed to cash accumulation. In working capital efficiency, completed-construction accounts receivable ¥10,814.5B is high relative to revenue (DSO estimated ~135 days), so progress in collection of contract receivables materially affects cash dynamics. Advances received on uncompleted contracts ¥2,027.4B provide a certain cash inflow cushion. Accounts payable of ¥6,068.4B implies supplier credit utilization that helps defer payments and improve working capital efficiency. Cash coverage vs. short-term debt is 0.81x, indicating limited liquidity, and practical rollover of CP ¥1,050B and short-term borrowings ¥4,402.4B is a premise for stable funding. Investment securities ¥4,617.4B could provide liquidity but include policy holdings and equity-method affiliate shares, limiting immediate convertibility. Long-term borrowings ¥2,667.8B and bonds ¥1,139.0B support stable funding from mature capital markets, and the interest coverage ratio 9.30x suggests resilience to interest burden.
Operating income ¥1,718.1B vs. ordinary income ¥1,671.5B indicates non-operating net decrease of about ¥46.6B (relative to operating income -2.7%). The breakdown shows financial income (interest income ¥139.9B + dividend income ¥66.0B = ¥205.9B) exceeded interest expense ¥184.8B, with equity-method investment gains ¥2.0B and FX and other non-operating items contributing. Net other non-operating income (other non-operating income ¥23.6B less other non-operating expenses ¥40.5B) partially offset non-operating income, resulting in net non-operating decrease ¥46.6B. Non-operating income ¥231.5B accounts for 1.1% of revenue, mainly consisting of interest and dividends and therefore relatively recurring. Extraordinary gains ¥141.6B (chiefly ¥138.4B from gains on sale of investment securities) are one-off and have limited sustainability. Comprehensive income ¥1,458.9B exceeded net income ¥1,233.4B by ¥225.5B primarily because valuation gains on securities ¥376.2B outweighed foreign currency translation adjustments -¥134.9B, so valuation increases on held equity lifted OCI. The likelihood that OCF will exceed net income is high, inferred from operating income ¥1,718.1B, and earnings quality is judged to be good.
Progress toward full-year forecast: Revenue 70.8% (¥21,460.5B ÷ ¥30,300.0B), Operating Income 75.4% (¥1,718.1B ÷ ¥2,280.0B), Ordinary Income 74.0% (¥1,671.5B ÷ ¥2,260.0B), Parent-company-shareholder net income 71.9% (¥1,222.1B ÷ ¥1,700.0B). Against the standard Q3 progress benchmark of 75%, operating income progress 75.4% is essentially on plan, while revenue at 70.8% is slightly behind but achievable with Q4 order collection progress. Forecast revisions have been implemented: full-year revenue forecast ¥3.03T (YoY +4.1%), operating income forecast ¥228.0B (YoY +50.1%), ordinary income forecast ¥226.0B (YoY +40.7%), reflecting Q3 margin improvement trends incorporated into full-year outlook. Given the construction industry seasonality (concentration of completions and billing in Q4), Q3 progress around 75% is within acceptable range and the probability of achieving full-year guidance is high.
Annual dividend is forecast as interim ¥45 and year-end ¥59 for a total of ¥104, up from prior-year interim ¥45 and full-year ¥90 (actual). Payout ratio relative to net income ¥1,222.1B is approximately 39.8% (total dividends about ¥48.6B calculated as outstanding shares 528,656 thousand - treasury shares 62,711 thousand = free float 465,945 thousand × ¥104), and annual dividend ¥104 against forecast EPS ¥364.11 implies a payout ratio of 28.6%, both well below the 60% benchmark and indicating high sustainability. No share buyback was noted, and total return ratio equals the payout ratio. Given interest coverage 9.30x, Debt/Capital 34.4%, and cash ¥3,561.9B, balance sheet strength affords room to increase dividends. Historically, dividends were maintained at ¥45 in 2023 and 2024, and this year’s increase is viewed as a signal of enhanced shareholder returns linked to profit growth.
Cost-overrun risk under fixed-price contracts typical of the construction industry. Increases in material costs (steel, cement), subcontracting costs, and labor could immediately pressure margins under a relatively low gross margin structure of 13.7%; a 1% increase in costs is estimated to reduce operating margin by 0.6–0.8pt. Collection delay risk on completed-construction accounts receivable ¥10,814.5B (50.4% of revenue). With DSO of 135 days, prolonged delays from clients’ financial deterioration or inspection/acceptance delays could strain liquidity. Refinancing risk: short-term interest-bearing debt ¥5,652.4B (short-term borrowings ¥4,402.4B + CP ¥1,050B + bonds maturing within 1 year ¥200B) vs. cash ¥3,561.9B yields cash coverage multiple 0.63x, indicating high reliance on rollover from financial institutions/markets; a sudden interest spike or credit tightening could worsen refinancing conditions and pressure finances.
Industry positioning (reference, company study): In the construction industry benchmark (2025-Q3, comparison of 4 industry peers), Kajima’s equity ratio 37.8% is 22.7pt below the industry median 60.5%, reflecting a relatively leveraged capital structure within the industry. ROE 9.1% exceeds the industry median 3.7% by 5.4pt, delivering top-tier capital efficiency in the industry. Operating margin 8.0% exceeds the industry median 4.1% by 3.9pt, demonstrating superiority in margin management. Current ratio 131.0% is below the industry median 207%, indicating the need for stricter short-term liability management. Net margin 5.7% exceeds the industry median 2.8% by 2.9pt, leading on bottom-line profitability. Revenue growth 5.9% significantly outperforms the industry median -3.5%, maintaining growth while peers struggle with declines. Overall, the company ranks high on profitability metrics (operating margin, ROE, net margin) but lags on solvency metrics (equity ratio, current ratio), leaving a challenge in balancing profitability and financial safety. The industry benchmark is compiled by the firm from public financial statements and is provided as reference information to understand relative positioning within the industry.
Improvement of operating margin to 8.0% (+3.3pt) driven by improved profitability in Building and Civil Engineering. The five-period operating margin trend (5.3% → 5.1% → 4.7% → 8.0%) suggests a reversal and entry into a structural improvement phase, bottoming in FY2025. High-margin segments — Civil Engineering (18.2%) and Development Business, etc. (19.0%) — are driving overall margin, and Building’s margin 7.4% showed large YoY improvement. Quality improvement in segment mix (reducing share of low-margin overseas projects and expanding domestic high-margin projects) should support sustainable margin gains. However, short-term-debt ratio 62.3% and cash coverage 0.81x indicate refinancing dependence; maturity management for CP and short-term borrowings and resilience to the interest-rate environment are keys to medium-term financial stability, along with promoting refinancing into long-term fixed-rate debt and strengthening cash-generation capacity. The company combines industry-leading profitability with below-median financial soundness; sustaining profit growth while increasing financial buffers will be a focus for investors, given ROE 9.1% and operating margin 8.0% alongside equity ratio 37.8% and current ratio 131%.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings disclosure data. It does not constitute a recommendation to invest in any particular security. Industry benchmark data are compiled by our firm from publicly disclosed financial statements and are provided for reference. Investment decisions are your responsibility; please consult professionals as needed.