| Indicator | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2278.5B | ¥2218.8B | +2.7% |
| Operating Income / Operating Profit | ¥261.8B | ¥217.0B | +20.7% |
| Ordinary Income | ¥274.7B | ¥234.3B | +17.2% |
| Net Income / Net Profit | ¥185.8B | ¥190.6B | -2.5% |
| ROE | 7.5% | 8.3% | - |
For the fiscal year ended March 2026, Revenue was ¥2,278.5B (YoY +¥59.7B +2.7%), Operating Income was ¥261.8B (YoY +¥44.8B +20.7%), Ordinary Income was ¥274.7B (YoY +¥40.4B +17.2%), and Net Income attributable to owners of the parent was ¥184.8B (YoY -¥14.1B -7.1%). At the operating stage, gross margin improved to 19.7% (from 17.5% a year earlier, +2.1pt), and significant improvement in project profitability drove double-digit operating profit growth; however, bottom-line profit lagged the prior year due to an expanded equity-method loss of ¥10.5B (prior year ¥2.0B), recognition of investment securities valuation loss of ¥8.8B, and an increase in the effective tax rate to 30.0%. Operating Cash Flow was ¥291.5B (YoY +28.1%), generating 1.58x of net income, and Free Cash Flow was ¥220.6B, which comfortably covered total dividends and share buybacks of ¥127.9B.
【Revenue】 Of Revenue ¥2,278.5B (YoY +2.7%), the breakdown was: core Facilities Construction Business ¥2,044.5B (YoY +3.2%), Other Businesses ¥254.4B (YoY -0.8%). Within Facilities Construction, the three main areas were Indoor Electrical Works ¥1,028.8B (composition 50.3%), HVAC and Piping Works ¥376.9B (18.4%), and Power Distribution Line Works ¥336.3B (16.4%), with Indoor Electrical Works leading the increase (from ¥971.6B prior year, +5.9%). Meanwhile, Information and Communications Works decreased substantially to ¥96.1B from ¥135.0B prior year (-28.8%), indicating a shift in project-type mix. Segment revenue composition was 88.9% Facilities Construction and 11.1% Other Businesses, a marginal change from the prior year (88.8%, 11.2%).
【Profitability】 Against Cost of Sales ¥1,830.5B, Gross Profit was ¥448.0B and gross margin improved to 19.7% (from 17.5% prior year, +2.1pt), the primary driver of profit growth. Completed Contract Costs were ¥1,644.6B, Completed Contract Gross Profit ¥399.9B, and Completed Contract Gross Margin 19.6% (from 17.1% prior year, +2.5pt), reflecting notable improvement in construction profitability. Selling, General & Administrative Expenses were ¥186.2B (SG&A ratio 8.2%, up +0.4pt from 7.8% prior year), but gross margin improvement outweighed this increase, delivering Operating Income ¥261.8B (Operating Margin 11.5%, up +1.7pt from 9.8% prior year). Non-operating income/expenses produced net income of ¥12.9B, with financial income including dividend income ¥9.3B and securities interest ¥3.5B totaling financial income ¥24.9B; conversely, equity-method loss ¥10.5B (prior year ¥2.0B) was the main non-operating expense. Extraordinary items were net -¥6.7B, with investment securities sale gains ¥11.6B offset by investment securities valuation loss ¥8.8B and impairment losses ¥6.1B. Pre-tax income was ¥268.0B, from which income taxes of ¥80.4B (effective tax rate 30.0%, a significant increase from 11.1% prior year) were deducted, resulting in Net Income attributable to owners of the parent of ¥184.8B. In conclusion, despite revenue and operating profit increases, net income declined due to higher tax burden and non-operating factors.
The Facilities Construction Business posted Revenue ¥2,044.5B (YoY +3.2%), Operating Income ¥256.6B (YoY +22.3%), and Operating Margin 12.5% (improved +1.9pt from 10.6% prior year), indicating substantial improvement in profitability. Other Businesses recorded Revenue ¥254.4B (YoY -0.8%), Operating Income ¥6.8B (YoY -24.3%), and Operating Margin 2.7% (down -0.8pt from 3.5% prior year), with peripheral activities such as electrical equipment and construction materials sales experiencing margin deterioration. Aggregate segment profit was ¥263.3B, less adjustments of ¥1.5B, leading to consolidated Operating Income of ¥261.8B. The Facilities Construction Business accounted for 97.4% of operating profit, indicating a portfolio concentrated in the core business.
【Profitability】Operating Margin 11.5% (up +1.7pt from 9.8% prior year), Net Profit Margin 8.1% (down -0.8pt from 8.9% prior year), ROE 7.5% (down -1.6pt from 9.1% prior year). Improvement at the operating stage was driven by gross margin +2.1pt, contributing to an increase in Completed Contract Gross Margin to 19.6%. Conversely, Net Profit Margin declined due to rise in the effective tax rate to 30.0% (from 11.1%) and expansion of equity-method losses. ROE decline was attributable to reduced net income, with an increase in shareholders' equity also contributing (Equity Ratio 78.0% vs 77.1% prior year). 【Cash Quality】Operating Cash Flow ¥291.5B was 1.57x Net Income ¥185.8B, and OCF/EBITDA was 0.97x (EBITDA ¥300.7B = Operating Income ¥261.8B + Depreciation ¥38.9B), maintaining high cash-generation capacity. Accrual ratio was △0.36 (= (Net Income ¥185.8B - Operating CF ¥291.5B) / Total Assets ¥3,178.2B), negative, indicating high quality of earnings. 【Investment Efficiency】Total Asset Turnover 0.72 turns (= Revenue ¥2,278.5B / average total assets), Capital Expenditures were ¥45.4B (2.0% of Revenue), reflecting a capital-light business profile. Investment securities stood at ¥1,048.1B (33.0% of total assets), presenting significant market price volatility risk. 【Financial Soundness】Equity Ratio 78.0%, D/E Ratio 0.28x (= (lease liabilities ¥6.9B + estimated other current liabilities) / Net Assets ¥2,478.2B; interest-bearing debt balance not disclosed), Current Ratio 245.1%, Quick Ratio 240.7%, indicating very solid liquidity. Cash and cash equivalents ¥301.8B plus short-term securities ¥230.7B totaled ¥532.5B against current liabilities ¥579.8B, ensuring adequate liquidity.
Operating CF was ¥291.5B (YoY +28.1%), generated from Pre-tax Income ¥268.0B before adjustments and changes in working capital. Major adjustments included Depreciation ¥38.9B, Goodwill Amortization ¥6.5B, Equity-method loss ¥10.5B, and Investment securities valuation loss ¥8.8B as positive add-backs, and increases in trade receivables ¥12.0B and decreases in trade payables ¥22.0B as cash outflows. After deducting income tax payments of ¥19.2B, Operating CF remained robust. Investing CF was -¥70.9B, with Capital Expenditures ¥45.4B and acquisition of investment securities ¥74.9B offset by proceeds from disposals/redemptions of ¥137.1B, resulting in a net restraint on investment. Financing CF was -¥129.9B, reflecting dividends ¥67.0B and share buybacks ¥60.3B as proactive shareholder returns. Free CF ¥220.6B substantially exceeded total shareholder return ¥127.9B, indicating ample cash-generation capacity. Cash and cash equivalents increased by ¥91.7B to ¥436.1B at fiscal year-end from ¥344.4B at the beginning of the period, expanding the financial buffer.
Operating Income ¥261.8B versus Ordinary Income ¥274.7B — the ¥12.9B difference is primarily net financial income (dividend income ¥9.3B, securities interest ¥3.5B) offset by equity-method loss ¥10.5B. Of non-operating income ¥24.9B, ¥9.8B classified as "other" may include one-off elements, but the majority are recurring financial income. Extraordinary items were net -¥6.7B; investment securities sale gain ¥11.6B is a one-time factor, while valuation loss ¥8.8B and impairment loss ¥6.1B are also non-recurring. Given Operating CF ¥291.5B substantially exceeds Net Income ¥185.8B, accrual quality is high, with depreciation and other non-cash items being primary adjustments and no signs of earnings management from accounting accruals. Comprehensive Income ¥310.0B exceeded Net Income ¥185.8B by ¥124.2B, largely due to Other Comprehensive Income (securities valuation differences ¥71.2B, retirement benefit adjustments ¥41.4B, etc.). Earnings power on an Ordinary Income basis is solid; tax burden increase and extraordinary losses compressed Net Income, but quality of earnings measured by Operating CF is judged healthy.
Full Year guidance is Revenue ¥2,450.0B (YoY +7.5%), Operating Income ¥270.0B (YoY +3.1%), Ordinary Income ¥295.0B (YoY +7.4%), and Net Income attributable to owners of the parent ¥197.0B (YoY +6.6%). Progress versus current results is: Revenue 93.0%, Operating Income 96.9%, Ordinary Income 93.1%, Net Income 93.8%, indicating generally steady progress. Full-year forecast EPS is ¥372.10 (current period actual ¥341.97), and dividend forecast is ¥70.00 (current period actual ¥135.00), with the dividend forecast presumed to be disclosed as year-end only. Revenue is expected to grow +7.5% YoY driven by expansion in Facilities Construction, but operating profit growth is limited to +3.1% with an assumed Operating Margin of 11.0% (down -0.5pt from current 11.5%). Net Income is projected to recover +6.6% YoY, assuming normalization of the effective tax rate and improvement in equity-method earnings. Forecasts are conservative; maintaining project profitability and stabilizing non-operating factors will be key.
Dividends were interim ¥65 and year-end ¥70 for an annual total of ¥135 (up ¥15 from prior year ¥120), yielding a payout ratio of 42.5% (Dividend ¥135 / EPS ¥341.97 ×100%). The payout ratio rose from 32.7% prior year, signaling a clear dividend-increase stance. Share buybacks of ¥60.3B were executed, increasing treasury stock to ¥147.7B (equivalent to 8.9% of outstanding shares) at year-end. Total dividends ¥67.0B plus share buybacks ¥60.3B sum to ¥127.3B as total shareholder return, implying a Total Return Ratio of 68.5% (= ¥127.3B / Net Income ¥185.8B), and 57.7% of FCF ¥220.6B was allocated to shareholder returns. DOE (dividend on equity) was 2.9% (= Dividends ¥67.0B / Ending Net Assets ¥2,478.2B); including share buybacks, total-return DOE is 5.4%. FCF coverage was 1.73x (= FCF ¥220.6B / Total Return ¥127.3B), indicating ample room and high sustainability of dividends and share repurchases. The full-year dividend forecast ¥70.00 is presumed to be year-end only and requires verification including interim dividends actually paid.
Project Profitability Deterioration Risk: Although gross margin improved to 19.7% (YoY +2.1pt), rising material and labor costs or changes in project mix could reverse this. Provision for loss on construction contracts is ¥0.2B (prior year ¥0.5B), reduced, but large project margin swings or construction delays could necessitate additional provisions. Uncompleted contract costs paid ¥80.0B and uncompleted contract receipts ¥75.7B are nearly balanced; should delays cause payment lead, working capital could be pressured.
Market Price Volatility Risk of Investment Securities: Investment securities ¥1,048.1B (33.0% of total assets) are exposed to market price fluctuations; the company recorded valuation loss ¥8.8B this period. Although securities valuation difference increased shareholders’ equity by ¥71.2B, market deterioration would reverse this and pose equity volatility risk. The divergence between Comprehensive Income ¥310.0B and Net Income ¥185.8B (¥124.2B) is largely due to Other Securities Valuation Differences and can affect the quality of reported bottom-line profit.
Volatility Risk in Equity-Method Investment Earnings: Equity-method loss ¥10.5B (prior year ¥2.0B) expanded markedly and suppressed Ordinary Income. Equity-method investments in associates amount to ¥275.2B (investments in affiliates), with an equity-method profit/loss rate of -3.8%, which is weak. Continued deterioration at investees would expand non-operating losses and depress Ordinary Income and Net Income. Extended recovery periods for investments or impairment risk also exist.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.5% | 5.5% (3.5%–7.2%) | +5.9pt |
| Net Profit Margin | 8.2% | 3.5% (2.5%–4.4%) | +4.6pt |
Both Operating Margin and Net Profit Margin substantially exceed industry medians, indicating top-tier profitability within the construction sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.7% | 9.8% (-2.1%–15.1%) | -7.2pt |
Revenue growth rate lags the industry median, suggesting a growth pace below the sector average. The company appears to prioritize maintaining high margins over scale expansion.
※Source: Company aggregation
Structural improvement at the operating level is sustained: Gross margin 19.7% (YoY +2.1pt) and Operating Margin 11.5% (YoY +1.7pt) reflect substantial improvement in project profitability, resulting in Operating Income growth of +20.7% YoY. Improvement to a Completed Contract Gross Margin of 19.6% reflects price pass-through and favorable project mix, and double-digit operating margins are expected to be maintained next fiscal year. Rising SG&A ratio to 8.2% is a concern, but as long as gross margin improvement offsets this, operating profitability should remain solid.
Strong cash-generation and proactive shareholder returns: Operating CF ¥291.5B was 1.57x Net Income and Free CF ¥220.6B comfortably covered dividends and share buybacks totaling ¥127.3B. Share buybacks of ¥60.3B increased treasury stock to ¥147.7B, signaling intent to improve capital efficiency. Total Return Ratio 68.5% and FCF coverage 1.73x are within sustainable ranges, and abundant liquidity (Cash + short-term securities ¥532.5B) supports continued stable dividends and opportunistic buybacks. A solid financial base with Equity Ratio 78.0% and D/E 0.28x underpins the stability of shareholder returns.
Bottom-line profit temporarily reduced by tax and non-operating factors but recoverable next year: Net Income ¥184.8B (YoY -7.1%) was mainly impacted by rise in effective tax rate to 30.0% (from 11.1%), equity-method loss ¥10.5B (from ¥2.0B), and investment securities valuation loss ¥8.8B, resulting in reduced net income despite substantial Operating Income growth. Full-year forecast assumes Net Income recovery to ¥197.0B (YoY +6.6%) based on tax normalization and improvement in equity-method results. Investment securities ¥1,048.1B (33.0% of total assets) present market risk, and the divergence between Comprehensive Income ¥310.0B and Net Income ¥185.8B (¥124.2B) is largely attributable to Other Securities Valuation Differences; this should be monitored as a volatility factor for shareholders’ equity and Net Income.
This report was generated by AI analyzing XBRL financial statement data and is an automated financial analysis document. 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 and, where appropriate, after consulting a professional advisor.