| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1392.2B | ¥1214.6B | +14.6% |
| Operating Income / Operating Profit | ¥172.0B | ¥128.1B | +34.3% |
| Ordinary Income | ¥177.1B | ¥131.7B | +34.5% |
| Net Income | ¥106.1B | ¥87.6B | +21.1% |
| ROE | 11.7% | 9.9% | - |
For the fiscal year ended April 2025, Revenue was ¥1392.2B (YoY +¥177.6B +14.6%), Operating Income was ¥172.0B (YoY +¥43.9B +34.3%), Ordinary Income was ¥177.1B (YoY +¥45.4B +34.5%), and Net income attributable to owners of parent was ¥124.9B (YoY +¥25.7B +25.9%), marking the third consecutive year of revenue growth and significant profit expansion. Operating margin improved by +1.9pt to 12.4%, and net profit margin rose +0.8pt to 9.0%, as price pass-through and construction efficiency gains further enhanced profitability. Results exceeded the full year plan (Revenue ¥1380.0B, Operating Income ¥168.5B); an improvement in Completed Contract Gross Profit Margin to 21.7% (prior year 20.6%) and a reduction in SG&A ratio to 9.4% (prior year 10.1%) realized operating leverage. ROE reached 11.7%, exceeding the prior year, delivering double-digit returns while maintaining financial soundness.
[Revenue] Revenue grew strongly to ¥1392.2B (+14.6%). The core Construction Business recorded ¥1390.3B (+14.7%), accounting for 99.2% of sales, supported by resilient demand for disaster prevention and infrastructure repairs and expansion in North America and other regions (regional sales: North America ¥113.6B, Other ¥46.8B, together approximately +¥51B YoY). Other businesses (merchandise and material sales, etc.) contracted to ¥11.2B (-20.7%), but impact was limited. Completed contract receivables increased to ¥407.4B, showing temporary cash absorption due to timing of milestone billing collections, while Advances received on uncompleted construction increased to ¥18.1B (+59.9%), indicating a high degree of prepayment and suggesting future revenue recognition potential. Electronic recorded claims also rose substantially to ¥47.7B (+128.2%), reflecting diversification of payment methods.
[Profitability] Cost of sales was ¥1088.9B, Completed contract costs were ¥1087.9B, and Completed Contract Gross Profit Margin improved by +1.1pt to 21.7% (prior year 20.6%). Gross profit increased to ¥303.3B (+20.8%), outpacing revenue growth, confirming successful price pass-through and favorable project mix. SG&A was constrained to ¥131.2B (+6.8%), below revenue growth, reducing SG&A ratio by -0.7pt to 9.4% and delivering economies of scale. R&D expenses were ¥9.1B (0.7% of sales), in line with prior year, and depreciation (in SG&A) edged up to ¥4.0B. Operating Income rose to ¥172.0B (+34.3%), expanding Operating Margin by +1.9pt to 12.4% (prior year 10.5%), maintaining double-digit profitability. Non-operating income totaled ¥12.5B, supported by dividend income ¥2.0B, interest income ¥1.6B, and foreign exchange gains ¥1.3B. Non-operating expenses were limited to ¥7.3B, with interest expense ¥1.2B and fees ¥0.8B at low levels. Ordinary Income reached ¥177.1B (+34.5%), reflecting continued improvement at the operating level. Extraordinary items were net -¥4.2B (extraordinary gains ¥2.5B, extraordinary losses ¥6.7B), including impairment losses of ¥5.4B, though the scale was limited. Income before income taxes was ¥172.9B; income taxes amounted to ¥48.0B (effective tax rate 27.7%), yielding Net Income of ¥106.1B (+21.1%). Net income attributable to owners of parent was ¥124.9B (+25.9%), achieving double-digit growth at the bottom line. In conclusion, revenue and profit growth coupled with a structural improvement in operating margin materially enhanced profitability.
The Construction Business (reportable segment) recorded Revenue ¥1390.3B (YoY +14.7%), Operating Income ¥171.5B (YoY +34.1%), and Operating Margin improved by +1.7pt to 12.3% (prior year 10.6%). High-margin project groups—slope and retaining measures, foundation and ground improvement, repair and reinforcement, and environmental remediation—maintained high profitability, with gross margin rising to 21.7% (prior year 20.6%) driving earnings growth. Segment assets decreased to ¥784.2B (YoY -5.4%), indicating improved asset efficiency. Other businesses (merchandise/materials sales, leasing, home-visit care, etc.) posted Revenue ¥11.2B (-20.7%), Operating Income ¥0.5B (+109.1%), and Operating Margin 4.1% (prior year 1.6%), showing profitability improvement despite small scale. The Construction Business generated 99.7% of operating income, indicating a highly concentrated profit source.
[Profitability] Operating margin 12.4% (prior year 10.5%, +1.9pt), Ordinary Income margin 12.7% (prior year 10.8%, +1.9pt), Net Income margin 9.0% (prior year 8.2%, +0.8pt) all improved, driven by an increase in Completed Contract Gross Profit Margin to 21.7% (prior year 20.6%) and a decline in SG&A ratio to 9.4% (prior year 10.1%). ROE was 11.7% (prior year estimate 11.1%), supported by improved net margin and Total Asset Turnover of 1.11x (prior year 1.00x), achieving double-digit returns within a financial leverage of 1.39x (prior year 1.38x). [Cash Quality] Operating Cash Flow (OCF) was ¥136.6B, 1.09x of Net Income attributable to owners of parent (¥124.9B), indicating healthy cash backing; the accrual ratio was -0.9%, in a strong range. However, OCF/EBITDA was 0.67x, low, affected by working capital absorption from increases in trade receivables (-¥27.0B cash outflow) and decreases in accounts payable (-¥13.8B outflow) amid revenue expansion. Free Cash Flow was ¥117.8B, sufficiently covering dividends and capital expenditures, indicating ample capital allocation flexibility. [Investment Efficiency] Total Asset Turnover improved to 1.11x (prior year 1.00x), as revenue growth outpaced asset growth. R&D to sales ratio remained 0.7%, reflecting the business focus on construction methods and process improvements. [Financial Soundness] Equity Ratio was 72.2% (prior year 72.6%), Current Ratio 237.8% (prior year 247.2%), demonstrating very strong balance sheet. Interest-bearing debt was minor at ¥17.4B (short-term borrowings ¥17.4B, long-term borrowings ¥0.1B), and Debt/EBITDA was limited to 0.09x. Cash and deposits were ¥299.8B, covering 89% of short-term liabilities ¥336.6B, and the Cash/Short-term Interest-bearing Debt ratio was 17.3x, indicating ample liquidity.
OCF was ¥136.6B (YoY +31.9%), robust, calculated from OCF subtotal ¥171.4B less working capital adjustments including increase in trade receivables -¥27.0B, decrease in accounts payable -¥13.8B, and corporate taxes paid -¥36.9B. The OCF/Net Income ratio was 1.09x, confirming solid cash backing, but milestone receivables and Completed Contract Receivables built up to ¥407.4B, causing temporary cash absorption due to milestone billing collection timing. Conversely, Advances received on uncompleted construction rose to ¥18.1B (+59.9%), indicating an increase in prepayments and potential future cash inflows tied to project progress. Investing Cash Flow was -¥18.9B, including capital expenditures -¥32.1B (within depreciation of ¥30.6B), purchases of investment securities -¥1.3B, proceeds from sales ¥4.4B, and insurance reserves -¥4.6B. Free Cash Flow was ¥117.8B, supporting total shareholder returns of ¥130.5B (dividends -¥48.6B and share buybacks -¥81.9B). Financing Cash Flow was -¥129.5B, with net increase in short-term borrowings ¥2.3B, repayment of long-term borrowings -¥0.6B, and lease repayments -¥0.7B, indicating limited financing activity and that shareholder returns were the principal use of funds. Cash and cash equivalents at period end were ¥299.8B (down ¥9.7B from ¥309.5B at the beginning), maintaining high liquidity. The OCF/EBITDA ratio of 0.67x shows room for improvement versus top industry peers, and improving working capital efficiency is a key task for the next fiscal year.
Most of the period’s Net Income was driven by operating improvements, indicating high quality of recurring earnings. Against Operating Income ¥172.0B, Non-operating income of ¥12.5B (0.9% of sales) comprised dividend income ¥2.0B, interest income ¥1.6B, and foreign exchange gains ¥1.3B, with limited one-off elements. Extraordinary items were net -¥4.2B, with extraordinary gains ¥2.5B (gain on sale of investment securities ¥1.8B, gain on sale of fixed assets ¥0.7B) against extraordinary losses ¥6.7B (impairment losses ¥5.4B, loss on disposal of fixed assets ¥0.3B). The impairment loss ¥5.4B reflects reduced profitability of certain fixed assets but is limited to 3.1% of Income before income taxes ¥172.9B and is unlikely to have a material continuing impact on base profit next year. The gap between Ordinary Income ¥177.1B and Net Income ¥106.1B is consistent with income taxes ¥48.0B at an effective tax rate of 27.7% and non-controlling interests ¥0.1B. The accrual ratio of -0.9% is in a healthy range, confirming that OCF exceeds Net Income. However, OCF/EBITDA at 0.67x reflects working capital absorption from rising receivables and falling payables, indicating scope to improve cash conversion efficiency. Overall, earnings show high sustainability driven by operating improvements with limited impact from one-off items.
Against the full year plan (Revenue ¥1380.0B, Operating Income ¥168.5B, Ordinary Income ¥173.0B, Net income attributable to owners of parent ¥118.0B), actual results exceeded plan: Revenue ¥1392.2B (+0.9%), Operating Income ¥172.0B (+2.1%), Ordinary Income ¥177.1B (+2.4%), and Net income attributable to owners of parent ¥124.9B (+5.8%). The upside was mainly due to higher-than-planned Operating Margin driven by Completed Contract Gross Profit Margin improvement to 21.7% and SG&A ratio decline to 9.4%, and net positive non-operating items from foreign exchange gains and increased dividend/interest income. The largest upside was at Net Income, aided by appropriate tax management and limited impact from non-controlling interests. EPS forecast of ¥280.71 was exceeded at ¥288.50 (+2.8%). Annual dividend forecast ¥40 was significantly exceeded as the actual dividend was ¥145. Achievement vs plan topped 100% across metrics, and momentum in profitability improvement is expected to continue into the next fiscal year.
Annual dividend was ¥145 (year-end ¥105, interim ¥40), with a payout ratio of 46.7%, within a sustainable range. This represented a substantial increase from last year’s dividend of ¥30 (+¥115), strengthening the shareholder return stance. Total dividends amounted to ¥48.6B (payout ratio equivalent to 38.9% of Net income attributable to owners of parent ¥124.9B), comfortably covered by OCF ¥136.6B and Free Cash Flow ¥117.8B. Additionally, share buybacks of ¥81.9B were executed, expanding total returns to ¥130.5B. The Total Return Ratio (dividends plus buybacks) was 104.5% relative to Net income attributable to owners of parent, slightly exceeding Free Cash Flow, but manageable given cash and deposits ¥299.8B and ample liquidity. Considering dividend continuity and the uptrend in payouts, and with double-digit ROE and a strong balance sheet, at least the current dividend level is expected to be maintained. Share buybacks should be executed flexibly, taking into account future project conditions and working capital seasonality, conditional on improvements in cash conversion.
Construction profitability risk: Further rises in material and labor costs or intensified bidding competition could compress gross margins. Although Completed Contract Gross Profit Margin improved to 21.7%, provision for construction losses increased sharply to ¥2.0B (prior year ¥0.3B, +534.4%), indicating some projects with deteriorating profitability. Monitoring order mix and price pass-through capability is required.
Decline in cash conversion efficiency: OCF/EBITDA ratio of 0.67x is low compared with top peers, and high Completed Contract Receivables of ¥407.4B are causing cash absorption. Shortening the collection cycle for milestone billing and refining accounts payable and accrued liabilities management are needed to improve working capital efficiency.
Segment concentration risk: The Construction Business accounts for 99.2% of revenue and 99.7% of operating profit, resulting in high exposure to sector cycles. While disaster prevention and infrastructure repair demand is resilient, shifts in public vs. private demand balance and increasing difficulty in securing construction capacity (personnel and partner firms) could affect profitability. Regional diversification and diversification of project types are keys to medium-term stable growth.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.4% | 5.5% (3.5%–7.2%) | +6.8pt |
| Net Margin | 7.6% | 3.5% (2.5%–4.4%) | +4.1pt |
Within the construction industry, an Operating Margin of 12.4% exceeds the median 5.5% by +6.8pt, and Net Margin 7.6% also substantially exceeds the median 3.5%. A high value-added strategy focused on specialized construction and strong price pass-through have driven industry-leading profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 14.6% | 9.8% (-2.1%–15.1%) | +4.7pt |
Revenue growth of 14.6% outperformed the industry median 9.8% by +4.7pt, placing the company in the top quartile. Domestic demand resilience and expansion in North America and other regions drove growth.
※Source: Company compilation
The most notable point is the structural uplift in profitability driven by a sustained improvement in Operating Margin. Improvement in Completed Contract Gross Profit Margin to 21.7% (prior year 20.6%) and reduction in SG&A ratio to 9.4% (prior year 10.1%) realized operating leverage, expanding Operating Margin to 12.4% (prior year 10.5%, +1.9pt). Maintaining double-digit margin range and achieving ROE 11.7% reflect successful price pass-through and construction efficiency improvements, confirming a medium-term uplift in earning power.
Substantial dividend increase (¥30 → ¥145) and execution of share buybacks ¥81.9B significantly strengthened shareholder returns. With payout ratio 46.7% and Total Return Ratio 104.5%, the company implemented aggressive returns while maintaining a very strong financial base (Cash and deposits ¥299.8B, Debt/EBITDA 0.09x). Free Cash Flow ¥117.8B supports total returns, and coexistence of double-digit ROE and low leverage provides a sustainable basis for continued returns.
Improving working capital efficiency remains a medium-term challenge. OCF/EBITDA ratio 0.67x and high Completed Contract Receivables ¥407.4B suggest temporary cash absorption due to milestone billing timing. Conversely, increase in Advances received on uncompleted construction ¥18.1B (+59.9%) supports future cash-in potential. Shortening receivables collection cycle and proper management of project progress are expected to improve cash conversion efficiency. Increase in provision for construction losses (¥0.3B → ¥2.0B) requires monitoring of project profitability, though scale is limited.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement 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 should be made at your own responsibility; please consult a professional as necessary.