| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥994.5B | ¥1058.8B | -6.1% |
| Operating Income / Operating Profit | ¥88.2B | ¥80.7B | +9.3% |
| Ordinary Income | ¥93.3B | ¥85.4B | +9.3% |
| Net Income / Net Profit | ¥61.2B | ¥47.6B | +28.5% |
| ROE | 8.6% | 7.3% | - |
For the fiscal year ended March 2026, Revenue was ¥994.5B (YoY -¥64.3B, -6.1%) and declined, but Operating Income was ¥88.2B (YoY +¥7.5B, +9.3%), Ordinary Income was ¥93.3B (YoY +¥7.9B, +9.3%), and Net Income attributable to owners of the parent was ¥61.2B (YoY +¥13.6B, +28.5%), marking a significant increase in profits. Improvement in the gross profit margin on completed contracts to 17.8% (prior year 16.6%) drove the Operating Margin up to 8.9% (prior year 7.6%), a +1.3pt increase, so profitability gains supported profit growth despite lower sales. The large increase in Net Income was aided by a special gain of ¥10.9B, mainly from gains on sales of investment securities of ¥10.8B, in addition to operating profit growth. Financial position remained healthy with an Equity Ratio of 68.5% and a D/E ratio of 0.46x, and ROE improved to 8.6% year-over-year.
[Revenue] Revenue was ¥994.5B (YoY -6.1%) and decreased. Completed contract revenue was ¥938.6B (YoY -7.2%) as the core Equipment Work (construction/equipment contracting) decreased, while Leasing was ¥30.3B (YoY +8.7%) and Photovoltaic Power Generation was ¥22.6B (YoY +7.1%), both increasing. By segment, EquipmentWork (Equipment Construction Business) accounted for ¥940.3B (YoY -7.2%), representing 94.6% of total company revenue and was the primary cause of the decline. PhotovoltaicPowerGeneration (Photovoltaic Power Generation) was ¥22.6B (YoY +7.1%), Leasing was ¥30.3B (YoY +8.7%), and Other was ¥15.5B (YoY +14.8%) — all increased, indicating expansion of non-construction revenue bases.
[Profitability] Gross profit improved in both amount and rate to ¥185.9B (Gross margin 18.7%, prior year 17.4%), and the gross profit margin on completed contracts rose to 17.8% (prior year 16.6%), up +1.2pt. SG&A was ¥97.7B (SG&A ratio 9.8%), reduced -5.4% YoY, driving Operating Income to ¥88.2B (Operating margin 8.9%, prior year 7.6%), up +9.3%. Non-operating items contributed a net +¥5.1B; dividend income ¥2.6B and interest income ¥0.6B supported Ordinary Income of ¥93.3B (YoY +9.3%), maintaining operating-driven profit growth. In extraordinary items, Special Income ¥10.9B, mainly gains on sales of investment securities ¥10.8B, was recorded, while Special Loss was ¥0.1B including impairment losses ¥5.3B, resulting in Pre-tax Income of ¥104.0B (YoY +36.3%). After corporate taxes of ¥28.7B, Net Income attributable to owners of the parent was ¥61.2B (YoY +28.5%). In conclusion, despite lower revenue, improvements in completed contract gross margins and SG&A control produced operating profit growth, and special gains drove a large increase in net profit.
EquipmentWork (Equipment Construction Business) recorded Revenue ¥940.3B (YoY -7.2%) and decreased, but Operating Income was ¥73.1B (YoY +6.7%) and margin improved to 7.8% (prior year 7.3%), securing profit growth through improved profitability. The main driver was improvement of the completed contract gross profit margin to 17.8% (prior year 16.6%), reflecting strengthened project profitability management. PhotovoltaicPowerGeneration (Photovoltaic Power Generation) posted Revenue ¥22.6B (YoY +7.1%), Operating Income ¥9.4B (YoY +17.2%), and margin 41.5% (prior year 40.4%), maintaining high profitability and serving as a stable earnings base in renewable energy. Leasing recorded Revenue ¥30.3B (YoY +8.7%), Operating Income ¥2.7B (YoY +2.3%), and margin 9.0% (prior year 9.6%); revenue rose but margin edged down slightly. Other segments recorded Revenue ¥15.5B (YoY +14.8%), Operating Income ¥3.0B (YoY +45.0%), and margin 19.6% (prior year 13.9%), showing high growth and improving profitability. Company-wide, Equipment Work accounted for 82.9% of total Operating Income, and high-margin Photovoltaic Power Generation contributed 10.7% to profits, supporting earnings stability.
[Profitability] Operating Margin improved to 8.9% (prior year 7.6%), up +1.3pt, and Net Margin rose to 6.2% (prior year 4.5%), up +1.7pt. Improvement in the completed contract gross profit margin to 17.8% (prior year 16.6%) and containment of SG&A to 9.8% (prior year 9.7%) led the profitability improvement. ROE improved to 8.6%, aided by higher Net Margin. [Cash Quality] Operating Cash Flow (OCF) of ¥40.1B is 0.66x of Net Income ¥61.2B, indicating a somewhat low cash conversion rate, with working capital headwinds including Accounts Payable decrease -¥12.8B and Increase in Advances Received on Uncompleted Contracts +¥8.0B. OCF/EBITDA ratio was 0.37x (EBITDA = Operating Income ¥88.2B + Depreciation ¥19.2B = ¥107.4B), relatively low, reflecting concentration of accounts receivable collection and progress timing near period end. Accrual ratio was 3.4%, a healthy level. [Investment Efficiency] Capital expenditure of ¥19.9B was broadly in line with Depreciation of ¥19.2B, indicating maintenance-level investment. Total asset turnover was 0.96x (Revenue ¥994.5B ÷ Total Assets ¥1,038.7B), stable given the construction industry characteristics. [Financial Soundness] Equity Ratio improved to 68.5% (prior year 65.1%), D/E ratio was 0.46x (Interest-bearing debt ¥54.1B ÷ Net assets ¥712.0B), and Debt/EBITDA was 0.50x, both low; Interest Coverage was excellent at OCF ¥40.1B ÷ Interest Paid ¥0.7B = 57x. Current Ratio 236.7% (Current Assets ¥584.0B ÷ Current Liabilities ¥246.7B) and Quick Ratio 236.7% indicate sufficient short-term liquidity, and Cash & Deposits ¥132.7B cover short-term interest-bearing debt ¥33.2B by 4.0x.
Operating Cash Flow was ¥40.1B (prior year -¥5.4B), a YoY improvement of +847.6%, but the cash conversion rate versus Net Income ¥61.2B remained 0.66x. OCF subtotal (before working capital changes) was ¥60.3B and solid, but working capital headwinds — Accounts Receivable change +¥2.7B, Accounts Payable decrease -¥12.8B, and Increase in Advances Received on Uncompleted Contracts +¥8.0B — totaled -¥20.2B, and corporate tax payments -¥23.1B also weighed. Investing Cash Flow was +¥9.5B, positive due to asset disposals, covering capex -¥19.9B with proceeds from sales of securities ¥30.5B and subsidy receipts ¥1.8B. Financing Cash Flow was -¥36.9B, mainly due to long-term debt repayments -¥29.7B and dividend payments -¥31.6B, partially offset by long-term borrowings of ¥19.8B. Free Cash Flow (FCF) was Operating CF ¥40.1B + Investing CF ¥9.5B = ¥49.5B, positive, enabling dividend payments ¥31.6B to be covered by FCF and raising Cash & Deposits by +¥38.1B to ¥132.7B. Interest and dividend income of ¥3.5B and interest paid ¥0.7B kept non-operating cash flows stable, and cash generation capacity is sufficient to maintain financial soundness.
Of Net Income ¥61.2B this period, Ordinary Income ¥93.3B reflects recurring income from core operations and non-operating income, and Special Income ¥10.9B (mainly gains on sales of investment securities ¥10.8B) was a one-off contributor. Non-operating income ¥5.8B, comprising dividend income ¥2.6B and interest income ¥0.6B from financial assets, represents recurring income and accounts for 0.6% of Revenue, showing no excessive dependence. The gain on sales of investment securities ¥10.8B, the main driver of special income, lacks repeatability, so Net Income is expected to normalize in future periods on an Ordinary Income basis. OCF ¥40.1B vs Net Income ¥61.2B gives an OCF/Net Income ratio of 0.66x, a somewhat low cash conversion rate, but accrual ratio 3.4% remains healthy and overall earnings quality is generally good. End-of-period balances of Completed Contract Accounts Receivable ¥274.6B and Advances Received on Uncompleted Contracts ¥28.7B reflect the construction business nature and timing concentration of progress and billing; normalization of working capital will be key to improving OCF. The divergence between Ordinary Income and Net Income is due to recorded special income, and Ordinary Income of ¥93.3B should be emphasized when assessing normalized earning power.
Progress versus full-year forecast: Revenue ¥994.5B (92.1% of forecast ¥1,080.0B), Operating Income ¥88.2B (93.8% of forecast ¥94.0B), Ordinary Income ¥93.3B (94.2% of forecast ¥99.0B) — slightly behind plan. Net Income attributable to owners of the parent was ¥61.2B, 105.5% of the full-year forecast ¥58.0B, reflecting one-off items such as gains on sales of investment securities. The 92–94% progress at the revenue and operating income stages is likely due to delayed ordering/completion timing in Equipment Work, but the completed contract gross profit margin of 17.8% exceeded plan, indicating solid profitability. The overshoot in final profit is mainly driven by Special Income ¥10.9B, creating a >±10% variance versus the full-year forecast, so attention should be paid to acceleration of operating-stage progress toward period end and the repeatability of one-off gains.
Annual dividend is ¥77.00 (Q2 ¥32.00, year-end ¥45.00), with a Payout Ratio of 59.4% (total dividends ¥30.7B ÷ Net Income attributable to owners of the parent ¥61.2B, the calculation basis equates to approximately 50.1%). With FCF ¥49.5B and total dividends ¥30.7B, FCF coverage is 1.61x, indicating dividends can be funded from internal cash, and dividend sustainability is sound. No share buybacks were conducted (¥0.0B), so shareholder returns are focused on dividends. Ample Cash & Deposits ¥132.7B and low leverage with Interest-bearing debt ¥54.1B provide a backstop for continued dividends. The Payout Ratio of 59.4% includes contribution from special income, but on an Ordinary Income basis the company can generally maintain around a 50% level. A 3-for-1 stock split was implemented effective October 1, 2024; on a post-split basis, the annual dividend for the fiscal year ended March 2025 is equivalent to ¥65.00.
Revenue concentration risk in Equipment Work: Equipment Work accounts for 94.6% of revenue, creating a structure where changes in project mix and project profitability directly affect company performance. Provisions for project losses were ¥1.0B (prior year ¥1.5B) and decreased, but Advances Received on Uncompleted Contracts ¥28.7B (prior year ¥20.7B, +38.5%) increased, so profitability management of in-progress projects and delays in completion timing pose risks to earnings. Although the completed contract gross profit margin improved to 17.8%, rising materials/subcontract costs and labor shortages causing schedule delays could pressure gross margins.
Weakness in working capital management and cash conversion: Operating CF ¥40.1B is 0.66x of Net Income, low, and working capital headwinds — Accounts Payable decrease -¥12.8B and Increase in Advances Received on Uncompleted Contracts +¥8.0B — produced a -¥20.2B impact. Concentration of Completed Contract Accounts Receivable ¥274.6B at period end, timing variance in period-end billing, and Increase in Advances Received on Uncompleted Contracts ¥24.7B (prior year ¥20.2B, +22.3%) increase volatility in operating cash flows. Improving OCF/EBITDA of 0.37x requires normalization of working capital and shortening receivable cycles.
Earnings volatility risk from valuation and sale of investment securities: The company holds Investment Securities ¥130.1B (prior year ¥121.3B); this period it recorded gains on sales of investment securities ¥10.8B, but repeatability is limited and Net Income may normalize in future periods. Securities valuation differences ¥36.2B (prior year ¥17.5B) have accumulated, but market fluctuations may cause valuation losses or impairment. Comprehensive income ¥94.1B versus Net Income attributable to owners of the parent ¥61.2B shows a ¥32.9B gap, and fluctuations in Other Securities Valuation Differences ¥18.7B affect comprehensive income, so capital and earnings volatility should be monitored.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.9% | 5.5% (3.5%–7.2%) | +3.3pt |
| Net Margin | 6.2% | 3.5% (2.5%–4.4%) | +2.6pt |
Operating Margin 8.9% exceeds the industry median 5.5% by +3.3pt; improvement in completed contract gross profit margin and SG&A control contributed to top-tier industry profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -6.1% | 9.8% (-2.1%–15.1%) | -16.0pt |
Revenue Growth -6.1% is -16.0pt below the industry median 9.8%, reflecting reduced sales due to order/completion timing in Equipment Work, but profitability improvement delivered operating profit growth.
※ Source: Company compilation
Improvement in Operating Margin despite lower sales: Despite Revenue decline of -6.1%, Operating Margin improved to 8.9% (prior year 7.6%), up +1.3pt, led by a +1.2pt rise in completed contract gross profit margin to 17.8% (prior year 16.6%). Containment of SG&A to 9.8% supported Operating Income ¥88.2B (+9.3%). This structure suggests success in strengthening project profitability management and optimizing project mix in Equipment Work. High margin in the Photovoltaic Power Generation business at 41.5% supports company-wide margins, and expansion of non-construction revenue bases is notable.
Overshoot in Net Income due to special income and limited repeatability: The large increase in Net Income attributable to owners of the parent ¥61.2B (+28.5%) is largely due to Special Income ¥10.9B, mainly gains on sales of investment securities ¥10.8B. The 105.5% progress vs full-year Net Income forecast is also due to one-off items, and Net Income is expected to normalize from the Ordinary Income base of ¥93.3B in coming periods. For assessing sustainability, focus should be on Operating Income ¥88.2B and Ordinary Income ¥93.3B.
Room to improve working capital management and cash generation: Operating CF ¥40.1B is 0.66x of Net Income and OCF/EBITDA 0.37x, indicating low cash conversion, with working capital headwinds of -¥20.2B from Accounts Payable decrease and Advances Received increase. Completed Contract Accounts Receivable ¥274.6B and timing concentration of period-end billing, and Increase in Advances Received on Uncompleted Contracts ¥24.7B point to volatility in OCF arising from progress and collection timing. Although FCF ¥49.5B is positive and dividend coverage is sound, normalization of working capital should stabilize Operating CF.
This report is an AI-generated financial analysis document automatically produced from XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.