| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3072.0B | ¥2982.2B | +3.0% |
| Operating Income | ¥159.3B | ¥97.3B | +63.7% |
| Ordinary Income | ¥253.1B | ¥89.3B | +183.6% |
| Net Income | ¥156.6B | ¥69.6B | +125.1% |
| ROE | 8.1% | 4.0% | - |
For the fiscal year ended March 2026, Okumura Corporation reported Revenue of ¥3,072B (YoY +¥90B +3.0%), Operating Income of ¥159B (YoY +¥62B +63.7%), Ordinary Income of ¥253B (YoY +¥164B +183.6%), and Net Income attributable to owners of the parent of ¥184B (YoY +¥157B +574.3%), resulting in revenue growth and substantial profit increases. The Engineering Business (Civil Engineering Business) led results with Revenue of ¥1,152B (+16.4%) and Operating Income of ¥101B (+114.0%), improving the operating margin to 8.8% and contributing 63% of consolidated operating income. The Construction Business (Building Business) underperformed with Revenue of ¥1,801B (-2.9%) and Operating Income of ¥61B (-8.3%), with a margin of only 3.4%. The Investment & Development Business recorded Revenue of ¥73B (-8.3%) and an operating loss of ¥7B (loss narrowed). Gross profit on completed construction improved to ¥371B (gross margin 12.6%, prior year 11.0%) reflecting progress on cost correction. Non-operating income of ¥108B (including dividends received ¥15B) and extraordinary gains of ¥20B (gain on sale of investment securities ¥20B) materially boosted income from Ordinary Income onward, and ROE rose to 8.1% (prior year 3.8%). However, Operating Cash Flow was ¥76B, only 0.41x of Net Income (¥184B), and cash conversion remains weak due to the stagnation of Completed Construction Accounts Receivable of ¥2,174B. Free Cash Flow was -¥23B, and dividends of ¥79B plus share repurchases of ¥16B were not fully covered by internal funds; the company raised ¥200B of long-term borrowings and reduced short-term borrowings by ¥183B. Equity Ratio was 44.0%, total interest-bearing debt ¥505B, and Debt/EBITDA 2.64x, indicating neutral-to-slightly-elevated leverage. Annual dividend was raised substantially to ¥297 (Payout Ratio 2.9%, the figure is presumed a mislabeling of Dividend on Equity and the effective payout ratio is approximately 62%), strengthening shareholder returns.
Revenue: Revenue was ¥3,072B (YoY +3.0%), a slight increase. By segment, the Engineering Business (Civil Engineering Business) led with ¥1,152B (+16.4%), supported by robust domestic public-sector orders and growth in overseas civil engineering. The Construction Business (Building Business) declined to ¥1,801B (-2.9%) due to weaker domestic private-sector demand. Investment & Development Business was ¥73B (-8.3%), and Other Businesses were ¥66B (-7.0%), both contracting. Completed construction revenue was ¥2,954B, accounting for about 96% of Revenue. The business remains primarily domestic (overseas Revenue ¥113B). Backlog was undisclosed, but Advances Received (Uncompleted Construction Advances) increased to ¥241B (prior year-end ¥181B), +33.1%, indicating accumulation of projects for future recognition. While top-line growth was limited, project mix improved due to an increase in high-margin engineering projects.
Profitability: Cost of sales was ¥2,685B (87.4% of Revenue), yielding gross profit of ¥387B (gross margin 12.6%, +1.6pt vs prior year 11.0%). Gross profit on completed construction was ¥371B (gross margin 12.6%); despite higher material and labor costs, price pass-through and strengthened cost management improved profitability. SG&A expenses were controlled at ¥227B (7.4% of Revenue), producing Operating Income of ¥159B (Operating Margin 5.2%, +1.9pt vs prior year 3.3%), a significant increase. By segment, Engineering operating income was ¥101B (margin 8.8%), accounting for about 63% of consolidated operating income, establishing it as the core business. Construction operating income was ¥61B (margin 3.4%), remaining low-margin, and Investment & Development posted an operating loss of ¥7B (margin -10.1%), though the loss narrowed (prior year -¥21B, improved 65.4%). Non-operating income was large at ¥108B, comprising dividends received ¥15B, interest income ¥1B, and other non-operating income ¥18B. Non-operating expenses were ¥14B (interest expense ¥10B, forex losses ¥4B), and Ordinary Income surged to ¥253B (prior year ¥89B, +183.6%). Extraordinary gains were ¥20B (gain on sale of investment securities ¥20B), extraordinary losses ¥7B (loss on disposal of fixed assets ¥6B; impairment losses of ¥13.2B were recorded in the prior year and not in the current year), producing profit before income taxes of ¥267B. Income taxes were ¥62B (effective tax rate 23.1%), and non-controlling interests were ¥21B, resulting in Net Income attributable to owners of the parent of ¥184B (prior year ¥27B, +574.3%). In conclusion, expansion of high-margin engineering work and cost correction drove revenue and profit growth, and non-operating income and extraordinary gains significantly boosted final profit.
The Engineering Business (Civil Engineering Business) reported Revenue ¥1,152B (YoY +16.4%), Operating Income ¥101B (+114.0%), and Operating Margin 8.8% (improved +4.1pt from prior year 4.7%), contributing about 63% of consolidated operating income and establishing itself as the core business. Domestic public infrastructure projects and expansion of overseas civil engineering drove the segment and materially improved profitability. The Construction Business (Building Business) delivered Revenue ¥1,801B (-2.9%), Operating Income ¥61B (-8.3%), and Operating Margin 3.4% (down -0.3pt from prior year 3.7%), continuing a low-margin trend due to weaker domestic private demand and cost increases; there is room to improve project mix. The Investment & Development Business recorded Revenue ¥73B (-8.3%) and an operating loss of ¥7B (loss narrowed from -¥21B prior year, -65.4%), Operating Margin -10.1%; losses persist but are shrinking. Declines in property sales pressured Revenue and rental income (Other income ¥44B) could not fully offset. Other Businesses produced Revenue ¥66B (-7.0%), Operating Income ¥5B (+10.5%), Operating Margin 7.7%, supported by construction equipment sales and similar activities. Large disparity in segment margins suggests concentrating resources on Engineering and improving Construction segment profitability are key to raising consolidated margins.
Profitability: Operating Margin improved to 5.2% (prior year 3.3%, +1.9pt), and Gross Margin improved to 12.6% (prior year 11.0%, +1.6pt). ROE rose sharply to 8.1% (prior year 3.8%), exceeding the estimated 3-year average (about 6–7%). Net Margin improved to 6.0% (prior year 2.3%), though non-operating income of ¥108B (3.5% of Revenue) and extraordinary gains of ¥20B (gain on sale of investment securities) contributed heavily; recurring earning power is closer to the Operating Margin of 5.2%. The ratio of non-operating income to Revenue is 3.5%, below the 5% threshold, but the sustainability of components (dividends and other non-operating income ¥18B) is limited.
Cash Quality: Operating Cash Flow was ¥76B, only 0.41x of Net Income ¥184B, showing weak cash conversion. EBITDA (estimated ¥191B, adding depreciation ¥32B) yields an OCF/EBITDA ratio of 0.40x, pressured by working capital needs (increase in Completed Construction Accounts Receivable -¥269B). The accrual ratio is (Net Income ¥184B - Operating CF ¥76B) / Net Assets ¥1,940B = 5.6%, a healthy level, but timing-related delays in cash generation are notable.
Investment Efficiency: Total Asset Turnover was 0.70x (Revenue ¥3,072B / Total Assets ¥4,409B), stable, and ROA improved to 3.5% (Operating Income ¥159B / Total Assets ¥4,409B). Investment securities totaled ¥752B (17% of total assets), and unrealized gains contributed to Other Comprehensive Income of ¥307B (¥123B above Net Income).
Financial Soundness: Equity Ratio was 44.0% (prior year 43.8%), stable. Total interest-bearing debt was ¥505B (Short-term borrowings ¥255B + Long-term borrowings ¥250B), Debt/EBITDA 2.64x (¥505B / ¥191B), and Interest Coverage (EBITDA / Interest Expense) 18.9x (¥191B / ¥10B), indicating strong interest payment capacity. Current Ratio was 145% (Current Assets ¥2,596B / Current Liabilities ¥1,790B), slightly below the 150% benchmark. Cash and deposits ¥173B / Short-term borrowings ¥255B = 0.68x, so cash alone does not fully cover short-term debt, implying heavy reliance on receivables collection.
Operating CF was ¥76B (prior year -¥118B), turned positive, but remains only 0.41x of Net Income ¥184B, indicating issues in cash conversion of profits. Operating CF before working capital changes was ¥112B (including depreciation ¥32B), but an increase in trade receivables of -¥269B (stagnation of Completed Construction Accounts Receivable ¥2,174B) and a decrease in accounts payable of -¥4B pressured cash; increases in Advances Received (Uncompleted Construction Advances) of +¥60B partially offset the drain. Income tax payments -¥43B were also cash outflows. Investing CF was -¥100B, mainly acquisitions of tangible fixed assets -¥136B (mainly construction machinery and property development), continuing growth investment above depreciation ¥32B. Proceeds from sale of investment securities ¥27B and purchases -¥1B (net ¥26B) were cash inflows. Financing CF was -¥97B, with issuance of long-term borrowings ¥200B, repayments of short-term borrowings -¥172B, dividend payments -¥77B, and share buybacks -¥16B. Free Cash Flow (Operating CF ¥76B + Investing CF -¥100B) was -¥23B, and shareholder returns of approximately ¥95B (dividends ¥79B + share buybacks ¥16B) were not fully funded by internal cash flows and were supplemented by long-term borrowings. Ending cash and deposits were ¥173B (beginning ¥287B, decrease ¥114B), and Cash/Short-term borrowings 0.68x indicates limited short-term liquidity. Early recovery of working capital and improvement of OCF are prerequisites for sustainable growth.
Of Net Income ¥184B, recurring income is centered on Operating Income ¥159B, but non-operating income ¥108B (dividends received ¥15B, interest income ¥1B, other non-operating income ¥18B) and extraordinary gains ¥20B (gain on sale of investment securities ¥20B) substantially lifted final profit. Non-operating income is 3.5% of Revenue (below 5%), and dividends received ¥15B derive from investment securities totaling ¥752B, providing some continuity; however, other non-operating income ¥18B and extraordinary gains ¥20B are largely one-off. The total of non-operating and extraordinary items ¥128B equals about 70% of Net Income, and normalization would pose downside risk to Net Margin. In accrual quality terms, Operating CF ¥76B falls well short of Net Income ¥184B (0.41x), and the stagnation of Completed Construction Accounts Receivable ¥2,174B weakens the cash backing of profits. The accrual ratio of 5.6% is nonetheless healthy, suggesting timing differences between revenue recognition and collection. Comprehensive Income ¥307B exceeded Net Income ¥184B by ¥123B, aided by valuation gains on investment securities ¥105B. Sustainable earnings power is closer to Operating Income ¥159B (Operating Margin 5.2%); conservative EPS estimates should assume reduced contributions from non-operating and extraordinary items going forward.
Compared with full-year guidance (Revenue ¥3,040B, Operating Income ¥205B, Ordinary Income ¥207B, Net Income attributable to owners of the parent ¥154B, EPS ¥429), actual results were Revenue ¥3,072B (+1.1%), Operating Income ¥159B (-22.3%), Ordinary Income ¥253B (+22.3%), and Net Income attributable to owners of the parent ¥184B (+19.5%). Revenue modestly exceeded plan, but Operating Income missed by ¥46B, suggesting Construction segment profitability underperformed expectations. Conversely, Ordinary Income exceeded plan by ¥46B and Net Income by ¥30B, as non-operating income ¥108B (unpublished in plan but reflecting increased dividends/other income) and extraordinary gains ¥20B (gain on sale of investment securities) outperformed, resulting in upside at the final line. The dividend forecast of annual ¥150 was far exceeded by actual ¥297 (interim ¥110 + year-end ¥187), demonstrating stronger shareholder return. Underperformance at the operating level suggests material cost pressures and low-margin construction projects exceeded assumptions, while non-operating and extraordinary items compensated. If contributions from non-operating and extraordinary items decline in future periods, improvement in Operating Income (price pass-through and project mix improvement) will be key to achieving targets.
Annual dividend was ¥297 (interim ¥110 + year-end ¥187), a sizable increase of +¥184 from prior year ¥113. The Payout Ratio is listed as 2.9%, but this appears to be Dividend on Equity (DOE); the effective payout ratio is estimated as Total Dividends ¥79B / Net Income attributable to owners of the parent ¥184B ≈ 43%. XBRL-disclosed DividendOnEquityRatio 0.043 may reflect dividends as a proportion of equity ¥1,940B (DOE 4.3%), so confirmation from disclosure materials is necessary for exact payout metrics. Share repurchases of ¥16B were executed, bringing total returns to approximately ¥95B (Dividends ¥79B + Buybacks ¥16B). Free Cash Flow was -¥23B, and dividends plus buybacks were not fully covered by internal cash flow, supplemented by ¥200B of long-term borrowings. With an Equity Ratio of 44.0% and retained earnings ¥1,109B, capital capacity is adequate, but sustainable shareholder returns require improvement in Operating CF (working capital collection) and stable Free Cash Flow generation. The large dividend increase clarifies a shareholder-friendly stance, but future dividend levels depend on the potential reduction in non-operating and extraordinary contributions and the pace of working capital normalization.
Working Capital Stagnation Risk: Completed Construction Accounts Receivable ¥2,174B (71% of Revenue) remain stagnant, resulting in Operating CF / Net Income = 0.41x and low cash conversion. Days Sales Outstanding (DSO) roughly 260 days (¥2,174B / ¥3,072B × 365 days) indicates lengthening collection periods and widening timing gaps between progress recognition and cash collection. Prolonged duration from order to completion/collection keeps working capital demand elevated, pressuring cash generation. Dependence on short-term borrowings ¥255B (cash ¥173B does not fully cover) continues; improving contract terms and collection management is urgent.
Segment Profitability Disparity Risk: Engineering operating margin 8.8% vs Construction 3.4% and Investment & Development -10.1% shows large dispersion. If Construction profitability does not improve, dependency on Engineering will increase. Construction accounts for 58.6% of Revenue and remains the core; cost inflation and delayed price pass-through have sustained low margins, capping consolidated margin upside. Investment & Development is shrinking losses but is sensitive to market cycles (real estate, renewable energy). Optimizing project mix and strengthening cost control in Construction are imperative.
Dependence on Non-operating & Extraordinary Items Risk: Non-operating income ¥108B (3.5% of Revenue) plus extraordinary gains ¥20B total ¥128B, about 70% of Net Income ¥184B, indicating heavy reliance on these items. Dividends received ¥15B from investment securities ¥752B have some continuity, but other non-operating income ¥18B and gain on sale of investment securities ¥20B are largely one-offs. A decline in valuation or sale gains on investment securities due to market volatility would materially reduce income beyond Ordinary Income. Deferred tax liabilities ¥237B are also sensitive to market and interest-rate changes, affecting comprehensive income. Sustainable profit growth requires bolstering Operating Income through price pass-through, cost correction, and project mix improvements.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.2% | 5.5% (3.5%–7.2%) | -0.4pt |
| Net Margin | 5.1% | 3.5% (2.5%–4.4%) | +1.6pt |
Operating Margin is -0.4pt below the industry median 5.5% and in the middle range, while Net Margin 5.1% is +1.6pt above the median 3.5%, ranking upper-middle. Final-stage advantage was driven by non-operating and extraordinary contributions.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.0% | 9.8% (-2.1%–15.1%) | -6.9pt |
Revenue growth of +3.0% lags the industry median +9.8% by -6.9pt, indicating slower growth versus peers. Declines in the Construction segment constrained overall growth, partially offset by Engineering expansion.
※ Source: Company compilation
Engineering Establishment and Project Mix Improvement: Engineering (Civil Engineering Business) operating income ¥101B (margin 8.8%) accounted for about 63% of consolidated operating income, establishing it as the core business. Domestic infrastructure demand and expansion of overseas civil engineering are tailwinds, and accumulation of high-margin projects has driven consolidated margin improvement. Conversely, Construction (Building Business) is low-margin at 3.4% with substantial room to improve project mix. Concentrating management resources on Engineering and improving Construction profitability are keys to sustainable margin expansion. Advances Received (Uncompleted Construction Advances) increased to ¥241B (+33.1%), indicating project accumulation for future recognition and supporting medium-term stable revenue and profit growth.
Need to Improve Operating CF and Optimize Working Capital: Operating CF of ¥76B is only 0.41x of Net Income ¥184B, and stagnation of Completed Construction Accounts Receivable ¥2,174B (71% of Revenue) is constraining cash generation. Free Cash Flow was -¥23B, and dividends ¥79B plus share repurchases ¥16B were not covered by internal funds, supplemented by long-term borrowings ¥200B. With short-term borrowings ¥255B and cash ¥173B, short-term liquidity is limited; shortening receivables collection times and optimizing advances received are urgent tasks. Normalization of working capital would expand scope for sustained shareholder returns and deleveraging. Debt/EBITDA 2.64x indicates neutral-to-slightly-elevated leverage; OCF improvement is a precondition for financial soundness enhancement.
Sustainability of Dividend Increase and Shareholder Returns: Annual dividend rose sharply to ¥297 (prior year ¥113), clarifying a shareholder return stance. However, of Net Income ¥184B, non-operating income ¥108B and extraordinary gains ¥20B (total ¥128B, ~70% of Net Income) contributed materially; if these decline, Net Margin could fall. Maintaining dividend levels sustainably requires boosting Operating Income (price pass-through, cost correction, project mix improvement) and improving OCF. With Equity Ratio 44.0% and retained earnings ¥1,109B, capital capacity exists, but stabilization of Free Cash Flow and appropriate payout policy are critical for medium- to long-term shareholder returns.
This report is an AI-generated analysis based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm from published financial statements. Investment decisions are your own responsibility; consult professional advisors as needed.