| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1752.9B | ¥1670.0B | +5.0% |
| Operating Income | ¥72.1B | ¥68.7B | +5.0% |
| Ordinary Income | ¥70.5B | ¥65.5B | +7.7% |
| Net Income | ¥49.3B | ¥39.5B | +24.8% |
| ROE | 9.8% | 8.6% | - |
For the fiscal year ended March 2025, Revenue was ¥1752.9B (YoY +¥82.9B, +5.0%), Operating Income was ¥72.1B (YoY +¥3.4B, +5.0%), Ordinary Income was ¥70.5B (YoY +¥5.0B, +7.7%), and Net Income was ¥49.3B (YoY +¥9.8B, +24.8%), representing increases in both top and bottom lines. Gross profit margin on completed construction stood at 10.8%, improving 0.4pt from 10.4% a year earlier, driven by price pass-through and tighter cost control. SG&A was ¥123.8B (prior year ¥111.2B), up 11.3%, and SG&A ratio rose 0.4pt to 7.1% from 6.7%, which limited Operating Margin to 4.1%, essentially flat. Net Income expanded materially due to a lower tax burden (effective tax rate 26.7%, prior year 25.9%). Operating Cash Flow (OCF) was ¥184.1B, a substantial increase of 255.2% from prior year ¥51.8B, driven by recovery of accounts receivable on completed construction (-¥52.9B) and an increase in advances on uncompleted construction (+¥18.1B); Free Cash Flow (FCF) was ¥176.2B.
[Revenue] Revenue from completed construction was ¥1715.2B (prior year ¥1636.6B, +4.8%), expanding steadily, and gross profit on completed construction increased to ¥185.0B (prior year ¥170.8B, +8.3%). Gross profit margin on completed construction improved to 10.8% from 10.4% a year earlier (+0.4pt) as a result of rigorous cost control and price pass-through. Other revenue was ¥37.7B, bringing total Revenue to ¥1752.9B. Work-in-progress payments decreased to ¥16.9B (prior year ¥19.0B, -10.9%), improving inventory efficiency. Advances on uncompleted construction increased to ¥103.9B (prior year ¥85.7B, +21.2%), indicating accumulation of pre-contract deposits. Provision for construction loss increased to ¥1.3B (prior year ¥0.8B, +74.7%) but remained immaterial at 0.08% of Revenue.
[Profitability] From Gross Profit of ¥195.9B (gross margin 11.2%), after deducting SG&A of ¥123.8B (SG&A ratio 7.1%, prior year 6.7%), Operating Income was ¥72.1B (Operating margin 4.1%). SG&A rose 11.3% from ¥111.2B in the prior year, mainly due to increases in lease expenses ¥13.1B, retirement benefit costs ¥1.4B, and advertising expenses ¥0.5B. Non-operating income totaled ¥4.2B (dividend income ¥1.4B, foreign exchange gains ¥0.6B, etc.), while non-operating expenses were ¥5.8B (interest paid ¥3.1B, commission expenses ¥1.1B, etc.), resulting in net non-operating expense of -¥1.6B and Ordinary Income of ¥70.5B (Ordinary Income margin 4.0%). Special gains were ¥0.9B (gain on sale of investment securities ¥0.6B, gain on sale of fixed assets ¥0.4B), special losses were ¥0.3B (impairment losses ¥1.8B, loss on disposal of fixed assets, etc.), for a net special gain of +¥0.6B. Pre-tax income was ¥71.1B, corporate taxes ¥19.0B (effective tax rate 26.7%). After deducting Net Income attributable to non-controlling interests ¥0.3B, Net Income attributable to owners of the parent was ¥49.3B (Net margin 2.8%). In conclusion, revenue and profit both increased.
[Profitability] Operating margin 4.1%, Ordinary Income margin 4.0%, Net margin 2.8%. The completed construction gross margin of 10.8% (up 0.4pt from 10.4% prior year) provided support, but an SG&A ratio of 7.1% (up 0.4pt from 6.7%) offset operating leverage. ROE was 9.8%, slightly down from 10.1% a year earlier, reflecting a balance between an increase in equity (¥502.1B, prior year ¥461.4B) and higher Net Income (+24.8%). [Cash Quality] OCF of ¥184.1B was 3.7x Net Income ¥49.3B, aided by working capital improvements (Accounts receivable -¥52.9B, Accounts payable +¥13.5B, Advances on uncompleted construction +¥18.1B), indicating very strong cash generation. OCF/Revenue ratio improved substantially to 10.5% from 3.1% a year earlier. [Investment Efficiency] Total asset turnover was 1.48x. Capital expenditure was ¥3.3B, 0.36x depreciation expense ¥9.2B, indicating restrained investment. Acquisition of intangible assets was ¥2.96B, keeping total investment at ¥6.3B. [Financial Soundness] Equity Ratio was 42.5% (up 2.8pt from 39.7% prior year), current ratio 193.1%, interest-bearing debt ¥134.8B (short-term borrowings ¥10.1B, long-term borrowings ¥124.7B, bonds, etc. ¥10.5B), resulting in Debt/Equity ratio of 26.9%, a conservative level. Interest coverage was 23.0x (Operating Income ¥72.1B ÷ interest paid ¥3.1B), indicating strong capacity to cover interest. Cash and deposits of ¥238.9B cover short-term borrowings + bond maturities of ¥16.6B by 14.4x, indicating low liquidity risk.
OCF was ¥184.1B (prior year ¥51.8B, +255.2%). Starting from pre-tax income ¥71.1B and adding non-cash expenses such as depreciation ¥9.2B, substantial cash generation occurred through working capital changes. Major contributors were decreases in accounts receivable ¥52.9B (collection of accounts receivable on completed construction), increases in advances on uncompleted construction ¥18.1B, and increases in accounts payable ¥13.5B. After deducting corporate taxes paid ¥28.4B, a strong net positive cash flow was secured. Investing CF was -¥8.0B, with capital expenditures ¥3.3B and intangible asset acquisitions ¥2.96B (total investment ¥6.3B) partially offset by proceeds from sale of securities ¥0.8B and proceeds from sale of fixed assets ¥0.9B. Free Cash Flow was robust at ¥176.2B, sufficient to cover dividend payments of ¥33.0B. Financing CF was -¥110.2B, reflecting net repayment of short-term borrowings ¥73.0B (compressed to ¥10.1B), net increase in long-term borrowings ¥5.6B (procured ¥16.0B - repaid ¥10.4B), bond redemptions ¥6.0B, dividend payments ¥33.0B, and share buybacks ¥1.1B. Ending cash was ¥238.9B, up ¥70.6B from prior year ¥168.3B, with cash accumulation supported by working capital efficiency and restrained investment.
The ¥21.2B gap between Ordinary Income ¥70.5B and Net Income ¥49.3B is primarily due to corporate taxes ¥19.0B; net special items were minor at +¥0.6B. Of non-operating income ¥4.2B, dividend income ¥1.4B and FX gains ¥0.6B are stable income sources. Of non-operating expenses ¥5.8B, interest paid ¥3.1B (up +63.2% from prior year ¥1.9B) reflects increased interest-bearing debt and rising interest rates. Special gains ¥0.9B (gain on sale of investment securities ¥0.6B and gain on sale of fixed assets ¥0.4B) are one-off factors; special losses ¥0.3B mainly comprised impairment losses ¥1.8B but were limited in scale. Comprehensive income was ¥74.0B, ¥24.7B above Net Income ¥49.3B, driven by valuation differences on available-for-sale securities ¥10.5B, adjustments related to retirement benefits ¥8.5B, and foreign currency translation adjustments ¥2.9B. The ratio of OCF to Net Income was 3.7x, primarily due to working capital improvements. However, the accelerated collection of accounts receivable and accumulation of advances on uncompleted construction may be concentrated at year-end, posing a potential reversal risk in the following fiscal year; nonetheless, these are assessed as consistent with order-based construction progress.
Full Year guidance is Revenue ¥1755.0B (vs actual +0.1%), Operating Income ¥77.8B (vs actual +7.9%), Ordinary Income ¥75.3B (vs actual +6.8%), Net Income ¥53.4B (vs actual +8.4%). Progress against the plan was Revenue 99.9%, Operating Income 92.7%, Ordinary Income 93.6%, Net Income 92.3%; Revenue landed near plan, while Operating and Ordinary Income underperformed. The main causes are estimated to be SG&A overrun (actual SG&A ¥123.8B exceeds the implied full-year plan) and increased non-operating expenses (interest paid, etc.). Actual EPS was ¥64.24 versus full-year forecast ¥64.22, effectively achieved. Annual dividend forecast ¥17.0 versus actual ¥45.0 represents a significant beat. The dividend forecast likely only disclosed the year-end dividend initially, with the interim dividend ¥16.0 not included; actual dividends were interim ¥16.0 + year-end ¥29.0 = annual ¥45.0.
Annual dividend was ¥45.0 (interim ¥16.0, year-end ¥29.0). Prior year dividend data is not provided, but payout ratio is 70.4% (calculated as total dividends ¥33.0B ÷ Net Income ¥49.3B, where total dividends were back-solved from dividend payments of ¥33.0B in Financing CF). The actual annual dividend ¥45.0 notably exceeded the full-year forecast ¥17.0, likely because the initial plan disclosed only the year-end dividend. FCF of ¥176.2B covers dividend payments ¥33.0B by 5.3x, indicating high dividend sustainability. Share buybacks amounted to ¥1.1B, and Total Return Ratio is (¥33.0B + ¥1.1B) ÷ ¥49.3B = 69.1%. With cash and deposits ¥238.9B and OCF ¥184.1B, liquidity is ample and maintaining payout ratios in the 70% range is assessed as feasible in the medium term.
Deterioration in Profitability Risk: Provision for construction loss increased to ¥1.3B from ¥0.8B prior year (+74.7%), highlighting risk in profitability management for large projects. Although the gross profit margin on completed construction improved to 10.8%, in a phase of rising raw material and labor costs, fixed-price contracts could squeeze margins. The SG&A ratio rose to 7.1% from 6.7% (+0.4pt), with increases in fixed costs such as personnel and lease expenses constraining Operating Margin expansion.
Working Capital Volatility Risk: OCF reached ¥184.1B, 3.7x Net Income, but the decrease in accounts receivable ¥52.9B and increase in advances on uncompleted construction ¥18.1B may be concentrated at year-end, posing a risk of a reversal in the following fiscal year. Advances on uncompleted construction ¥103.9B represent 5.9% of Revenue, up from 5.1% prior year; while order conditions are healthy, delays in construction progress or customer cancellations could affect revenue recognition and liquidity.
Rising Interest Burden Risk: Interest paid increased to ¥3.1B from ¥1.9B (+63.2%), reflecting higher interest-bearing debt (¥134.8B vs prior year ¥123.6B) and rising interest rates. While Interest Coverage remains healthy at 23.0x, future interest rate developments could amplify the impact on Ordinary Income. Long-term borrowings of ¥124.7B extend the maturity profile, but attention should be paid to changes in financing conditions at interest reset points.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.1% | 5.5% (3.5%–7.2%) | -1.4pt |
| Net Margin | 2.8% | 3.5% (2.5%–4.4%) | -0.7pt |
The company’s Operating Margin of 4.1% is 1.4pt below the industry median of 5.5%, placing profitability in the mid-to-lower range within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 5.0% | 9.8% (-2.1%–15.1%) | -4.9pt |
The company’s Revenue growth of 5.0% lags the industry median of 9.8% by 4.9pt, indicating a somewhat slower growth pace relative to peers.
※ Source: Company compilation
Gross profit margin on completed construction improved to 10.8% from 10.4% (+0.4pt), confirming progress in price pass-through and cost control. Conversely, SG&A ratio rose to 7.1% from 6.7% (+0.4pt), keeping Operating Margin flat at 4.1%. Structural improvement in Operating Margin will require fixed-cost efficiency and a higher share of high value-added projects. OCF was 3.7x Net Income, showing marked improvement in working capital efficiency; however, the collection of accounts receivable and the increase in advances on uncompleted construction may be concentrated at year-end, so monitoring next fiscal year’s cash flow trends is important.
Capital expenditure was restrained at ¥3.3B (0.36x depreciation ¥9.2B). Execution of DX and labor-saving investments necessary for medium-to-long-term productivity and competitiveness will be key going forward. Interest-bearing debt ¥134.8B with Equity Ratio 42.5% indicates strong financial health, but interest paid rose +63.2% year-on-year, so sensitivity of Ordinary Income to rising rates warrants attention. Payout ratio 70.4% and FCF coverage 5.3x support sustainable shareholder returns, and liquidity with cash and deposits ¥238.9B is ample.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings announcement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as appropriate.