| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥1694.0B | ¥1407.0B | +20.4% |
| Operating Income | ¥137.4B | ¥86.5B | +58.8% |
| Ordinary Income | ¥137.0B | ¥86.2B | +59.0% |
| Net Income | ¥85.3B | ¥46.0B | +85.3% |
| ROE | 11.2% | 6.7% | - |
For the fiscal year ended March 2026, the company achieved significant top-line and bottom-line growth: Revenue ¥1,694.0B (YoY +287B, +20.4%), Operating Income ¥137.4B (YoY +50.9B, +58.8%), Ordinary Income ¥137.0B (YoY +50.8B, +59.0%), and Net Income ¥85.3B (YoY +39.3B, +85.3%). The Building (Architectural) segment drove results with Revenue ¥1,133.7B (+26.9%) and Operating Income ¥85.3B (+300.7%), while the Civil Engineering segment also performed solidly with Revenue ¥387.5B (+20.2%) and Operating Income ¥61.1B (+38.4%). The Real Estate segment recorded Revenue ¥188.4B (-13.0%) and Operating Income ¥49.4B (-22.2%) due to volume adjustment but maintained a high margin of 26.2%. Gross margin expanded to 15.3% (from 13.8%, +1.5pt) and Operating Margin to 8.1% (from 6.2%, +1.9pt); SG&A ratio declined to 7.2% (from 7.6%, -0.4pt). EPS was ¥196.72 (from ¥131.17, +50.0%), and BPS was ¥1,760.04 (from ¥1,599.56, +10.0%), indicating enhanced shareholder value.
【Revenue】 Revenue ¥1,694.0B (+20.4%) was driven by strong progress in Building and Civil Engineering. By segment, Building was the largest at ¥1,133.7B (+26.9%, revenue mix 66.9%), with recognition of progress on large projects. Civil Engineering expanded to ¥387.5B (+20.2%, mix 22.9%), while Real Estate declined to ¥188.4B (-13.0%, mix 10.2%) amid inventory adjustments; nonetheless, Real Estate’s high margins supported consolidated profitability. Completed-contract revenue (Building + Civil Engineering) was ¥1,501.6B (YoY +26.5%), and Development-related revenue was ¥192.4B (-12.5%), with strong construction activity lifting the aggregate. Acceleration in orders and project progress was the primary driver of top-line growth.
【Profitability】 Operating Income ¥137.4B (+58.8%) and Operating Margin 8.1% (from 6.2%, +1.9pt) reflected marked improvement in profitability. Gross margin on completed contracts improved to 12.6% (from 9.1%, +3.5pt), while Development-related gross margin was 36.9% (from 39.0%, -2.1pt), and improved construction profitability lifted consolidated margins. SG&A was ¥122.4B (+13.7%), below revenue growth of +20.4%, resulting in positive operating leverage. By segment, Building’s margin improved sharply to 7.5% (from 2.4%, +5.1pt) and Operating Income rose +300.7% YoY. Civil Engineering maintained high profitability at 15.8% (from 13.7%, +2.1pt). Real Estate had a margin of 26.2% (from 29.3%, -3.1pt); all segments kept margins above 10% in absolute terms. Ordinary Income ¥137.0B (+59.0%) was broadly in line with Operating Income; non-operating items were roughly neutral (Dividend income ¥1.6B, interest expense ¥3.4B). Special losses totaled ¥19.9B (prior year ¥5.0B), comprising business liquidation loss ¥19.4B, impairment losses ¥4.7B, and loss on disposal of fixed assets ¥0.4B, which temporarily depressed Net Income. After corporate taxes ¥35.8B (effective tax rate 29.7%), Net Income was ¥85.3B (+85.3%). In conclusion, revenue growth and margin improvement in Building and Civil Engineering drove the substantial increase in profit.
The Building segment dramatically improved: Revenue ¥1,133.7B (+26.9%), Operating Income ¥85.3B (+300.7%), Operating Margin 7.5% (from 2.4%, +5.1pt). Progress on large projects and stronger cost control made this the core segment, contributing 43.6% of consolidated Operating Income. The Civil Engineering segment had Revenue ¥387.5B (+20.2%), Operating Income ¥61.1B (+38.4%), Operating Margin 15.8% (from 13.7%, +2.1pt), contributing 31.2% of consolidated Operating Income. The Real Estate segment recorded Revenue ¥188.4B (-13.0%), Operating Income ¥49.4B (-22.2%), Operating Margin 26.2% (from 29.3%, -3.1pt), remaining the highest-margin business and contributing 25.2% of consolidated Operating Income. Volume reduction amid inventory adjustments drove the revenue decline in Real Estate, but high margins were sustained. The large disparity in segment margins and increasing concentration in Building (revenue mix 66.9%) are points to monitor.
【Profitability】Operating Margin 8.1% (from 6.2%, +1.9pt) and Net Margin 5.0% (from 3.3%, +1.7pt) improved substantially, driven by Gross Margin 15.3% (from 13.8%, +1.5pt). ROE was 11.2% (from 8.3%, +2.9pt), with EPS ¥196.72 (from ¥131.17, +50.0%) indicating expanded shareholder returns. 【Cash Quality】Operating Cash Flow (OCF) ¥98.5B, 1.16x of Net Income ¥85.3B, shows solid earnings backing, but OCF/EBITDA of 0.67x (=¥98.5B ÷ ¥147.1B) suggests room to improve cash conversion. Increases in working capital (Accounts receivable +¥83.7B, Accounts payable -¥15.0B) constrained cash generation. 【Asset Efficiency】Total asset turnover was 1.15x (=¥1,694.0B ÷ ¥1,476.6B), indicating good efficiency, and Tangible fixed asset turnover was 7.5x, reflecting an asset-light model. Investment securities increased to ¥70.8B (from ¥56.6B, +25.1%), and valuation difference on available-for-sale securities of ¥10.1B boosted comprehensive income. 【Financial Health】Equity Ratio 51.5% (from 47.7%, +3.8pt), Current Ratio 196.1%, and Quick Ratio 196.1% indicate ample short-term liquidity. Debt/Equity was 0.94x, with interest-bearing debt ¥308B (Short-term borrowings ¥235B + Long-term borrowings ¥73B) and Net Debt ¥145.4B (=¥308B - Cash ¥162.6B), so net leverage is limited; however, short-term debt ratio is high at 76.3% (=¥235B ÷ ¥308B), indicating elevated short-term dependence and refinancing risk. Interest coverage was 40.4x (=¥137.4B ÷ ¥3.4B), showing strong ability to service interest.
OCF was ¥98.5B (vs prior year -¥171.9B), a substantial improvement, generating healthy cash versus pre-tax profit ¥120.5B. OCF before working capital changes totaled ¥112.0B, impacted by increases in Accounts receivable -¥83.7B, decreases in Accounts payable -¥15.0B, and decrease in Inventories +¥4.9B, then paying corporate taxes -¥11.9B. Investing Cash Flow was +¥19.2B (prior year -¥2.6B), as proceeds from sale of fixed assets ¥29.7B exceeded capital expenditure ¥12.6B. Free Cash Flow was ¥117.7B (=OCF ¥98.5B + Investing CF ¥19.2B), ample to cover dividends ¥36.9B and capex (FCF coverage 2.64x = ¥117.7B ÷ ¥44.5B). Financing Cash Flow was -¥111.6B, mainly driven by net reduction in short-term borrowings -¥76.0B (increase ¥128B - repayments ¥205B), net reduction in long-term borrowings -¥1.0B (proceeds ¥8B - repayments ¥9B), and dividend payments -¥36.9B. Cash and cash equivalents were ¥162.3B (from ¥156.2B, +¥6.1B), a slight increase, with most free cash used to reduce interest-bearing debt. Cash/Short-term debt ratio was 0.69x (=¥162.6B ÷ ¥235B), indicating limited cash cover relative to short-term borrowings, so refined liquidity management is important.
Of Ordinary Income ¥137.0B, Operating Income ¥137.4B comprised the majority; non-operating items were roughly neutral with Dividend income ¥1.6B and Insurance dividends ¥0.1B offset by interest expense ¥3.4B. Special items comprised Special Income ¥3.3B (Gain on sale of investment securities ¥0.6B, Gain on sale of fixed assets ¥2.1B) versus Special Losses ¥19.9B (Business liquidation loss ¥19.4B, Impairment loss ¥4.7B, Loss on disposal of fixed assets ¥0.4B), resulting in a large net loss on special items. The drop from Ordinary Income ¥137.0B to Net Income ¥85.3B (-38%) was mainly due to these one-off items. Comprehensive Income ¥105.1B exceeded Net Income, aided by Other Comprehensive Income ¥19.8B (valuation difference on securities ¥10.1B, actuarial differences on retirement benefits ¥10.3B). Accrual ratio was -0.9% (=(OCF ¥98.5B - Net Income ¥85.3B) ÷ Total Assets ¥1,476.6B), negative and indicating OCF exceeded Net Income, reflecting high quality of earnings. However, OCF/EBITDA 0.67x is low, and Completed-contract receivables ¥662.4B (from ¥581.5B, +13.9%) and Advances received ¥105.9B (from ¥103.5B, +2.3%) show timing gaps between progress recognition and collection, impeding cash conversion. Ordinary Income–based earnings quality is strong and special losses are evaluable as temporary, but working capital management remains an ongoing challenge.
The full-year guidance published was Revenue ¥1,500.0B (vs actual -11.5%), Operating Income ¥90.0B (vs actual -34.5%), Ordinary Income ¥88.8B (vs actual -35.2%), Net Income ¥82.0B (vs actual -3.9%), EPS ¥189.90, and Dividend ¥50.00. Actuals materially exceeded guidance: Revenue ¥1,694.0B (+12.9% vs guidance), Operating Income ¥137.4B (+52.7%), Ordinary Income ¥137.0B (+54.3%). Net Income ¥85.3B was +4.0% vs guidance ¥82.0B, a smaller beat due to Special Losses ¥19.9B. Dividend actually paid was ¥100 (Interim ¥45 + Year-end ¥55) versus guidance ¥50, i.e., double the forecast; payout ratio on an actual basis was 61.0%, considerably above the guided payout ratio 26.3% (=¥50 ÷ ¥189.90). The company’s guidance appears conservative and did not fully assume accelerated margin improvements and earlier-than-expected progress on large projects. Going forward, sustaining margin via price pass-through of rising material and labor costs and maintaining construction profitability will be focal points.
Annual dividend was ¥100 (Interim ¥45 + Year-end ¥55, from prior year ¥40, +¥60), implying a payout ratio of 61.0% (=¥100 ÷ ¥164.03, EPS on an intra-period average share basis), materially exceeding the full-year forecast dividend of ¥50. Total dividends ¥36.9B ( = ¥100 × 43,047 thousand shares average) versus Free Cash Flow ¥117.7B gives FCF coverage 3.19x, indicating dividends were comfortably funded internally. DOE (Dividend-to-Equity) was about 5.1% (=¥36.9B ÷ ¥760.1B), showing balance from a capital efficiency perspective. Payout ratio 61.0% slightly exceeds a 60% benchmark but is supported by cash ¥162.6B and OCF ¥98.5B, suggesting high sustainability. No share buyback was confirmed; returns concentrated on cash dividends. The increase from prior year dividend ¥40 (payout ratio 61%) is aligned with profit growth, and stable dividends linked to future profit growth are expected. Given high short-term debt ratio 76.3% and dependence on short-term borrowings, the company is likely to balance maintaining flexibility in financing with shareholder returns.
Segment concentration risk: The Building segment accounts for 66.9% of Revenue and 43.6% of Operating Income, creating concentration risk where margin deterioration or project delays on large projects would materially affect consolidated results. Although provisions for construction loss were limited at ¥5.7B (from ¥7.3B), the accumulation of Completed-contract receivables ¥662.4B suggests concentration of projects and elongated collection cycles. In periods of rising material and labor costs, maintaining Gross Margin 15.3% is a challenge, and delays in passing on costs or loss recognition on large projects could pressure profitability.
Short-term liquidity risk: Short-term borrowings ¥235B account for 76.3% of interest-bearing debt, and Cash & Deposits ¥162.6B yields a Cash/Short-term debt ratio of 0.69x, reflecting maturity mismatch. Although Current Ratio is 196.1% and short-term liquidity appears ample, the balance of Completed-contract receivables ¥662.4B and Advances received ¥105.9B may create timing gaps between revenue recognition and cash collection, potentially straining liquidity. In a rising-rate environment, refinancing short-term borrowings at higher rates would raise interest payments and could erode the current Interest Coverage 40.4x. OCF/EBITDA 0.67x signals weak cash conversion; continued working capital expansion could necessitate additional interest-bearing debt.
Real estate market risk: The company holds Inventories for sale of real estate ¥196.0B (from ¥219.8B). While the Real Estate segment reports a high Operating Margin of 26.2%, market softening or higher interest rates could reduce demand, trigger inventory valuation losses, and compress margins. Real Estate Revenue is already in an adjustment phase at ¥188.4B (-13.0%), so future sales pace and maintenance of Development gross margin 36.9% are critical. Investment securities ¥70.8B ( +25.1%) and valuation differences on securities ¥33.5B are recorded in Net Assets, but market volatility could lead to valuation losses and reductions in equity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.1% | 5.5% (3.5%–7.2%) | +2.6pt |
| Net Margin | 5.0% | 3.5% (2.5%–4.4%) | +1.5pt |
The company’s Operating Margin 8.1% exceeds the industry median 5.5% by 2.6pt, and Net Margin 5.0% exceeds the median 3.5% by 1.5pt. Improvement in Building and Civil Engineering profitability contributed to above-median performance.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 20.4% | 9.8% (-2.1%–15.1%) | +10.5pt |
Revenue growth 20.4% surpasses the industry median 9.8% by 10.5pt, driven by accelerated progress on large projects.
※Source: Company compilation
Substantial margin improvement in Building and Civil Engineering (Building margin 7.5%, from 2.4% +5.1pt; Civil margin 15.8%, from 13.7% +2.1pt) drove improved profitability, achieving an Operating Margin of 8.1% (2.6pt above the industry median 5.5%) and placing the company among the industry’s higher-margin players. Revenue growth 20.4% (10.5pt above industry median 9.8%) materially outpaced peers, and Operating Income exceeded company guidance (¥9.0B) by 52.7%, highlighting conservative guidance. Improved Gross Margin 15.3% (from 13.8%, +1.5pt) and reduced SG&A ratio 7.2% (from 7.6%, -0.4pt) delivered operating leverage and ROE 11.2% (from 8.3%, +2.9pt). EPS ¥196.72 (+50.0%) and dividend ¥100 (from ¥40, +150%) demonstrate clear enhancement in shareholder value.
Cash-flow backing was solid: OCF ¥98.5B (1.16x Net Income), Free Cash Flow ¥117.7B, sufficient to cover dividend payments ¥36.9B (FCF coverage 3.19x). Payout ratio 61.0% is within industry norms and DOE ~5.1% balances capital efficiency. Equity Ratio 51.5% (from 47.7%, +3.8pt) and Interest Coverage 40.4x indicate sound financial health and ability to pursue growth investments while returning capital to shareholders. Nonetheless, OCF/EBITDA 0.67x signals room for improvement in cash conversion and Completed-contract receivables ¥662.4B (+13.9%) and increased accounts receivable are pressuring working capital. Heavy reliance on short-term borrowings ¥235B (short-term debt ratio 76.3%) and Cash/Short-term debt ratio 0.69x imply refinancing risk that needs addressing.
Increasing concentration in the Building segment (revenue mix 66.9%, profit mix 43.6%) raises exposure to large-project margin volatility and schedule risk. In a period of rising material and labor costs, maintaining Gross Margin 15.3% will depend on continued price pass-through and suppression of construction losses (construction loss provision ¥5.7B, down from ¥7.3B, -22.3%). The Real Estate segment is in an adjustment phase (Revenue ¥188.4B, -13.0%) but remains highly profitable with Operating Margin 26.2% and limited market risk for inventories for sale ¥196.0B. Special Losses ¥19.9B (Business liquidation loss ¥19.4B, Impairment loss ¥4.7B) are assessed as one-off, and Ordinary Income–based earnings power appears robust. Medium-term value creation will be driven by reducing short-term borrowings dependence, improving working capital efficiency (OCF/EBITDA improvement), and diversifying exposure away from Building concentration.
This report was automatically generated from XBRL earnings disclosure data analyzed by AI. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by our firm based on publicly disclosed financial statements and are for reference only. Investment decisions are your responsibility; consult a professional advisor as needed.