| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥7420.2B | ¥6718.9B | +10.4% |
| Operating Income / Operating Profit | ¥831.4B | ¥583.3B | +42.5% |
| Ordinary Income | ¥849.8B | ¥595.0B | +42.8% |
| Net Income / Net Profit | ¥565.2B | ¥373.2B | +51.4% |
| ROE | 13.9% | 9.8% | - |
For the fiscal year ended March 2026, Revenue was ¥7,420B (YoY +701B, +10.4%), Operating Income was ¥831B (YoY +248B, +42.5%), Ordinary Income was ¥850B (YoY +255B, +42.8%), and Net Income attributable to owners of the parent was ¥635B (YoY +212B, +49.9%), achieving higher sales and substantial profit growth. Operating margin improved to 11.2% from 8.7% a year ago (+2.5pt), and net margin improved to 8.6% from 6.3% (+2.3pt), indicating a marked enhancement in profitability. Gross profit margin on completed contract work rose to 16.3% from 13.8% (+2.5pt), with improved cost control and a favorable order mix driving profit expansion. ROE was 13.9%, 1.8pt above last year’s 12.1%, achieving high shareholder capital efficiency while maintaining a healthy financial base with an Equity Ratio of 63.8%.
[Revenue] Revenue from completed contract work was ¥7,420B, up ¥701B (＋10.4%) year-on-year. By segment, the core ENGINEERING segment accounted for ¥7,318B (YoY +728B, +10.7%), representing 98.6% of total revenue, with progress on large projects and expanded order intake driving sales growth. Other businesses (electrical equipment sales, real estate, leasing, power generation) declined to ¥503B (YoY -42B, -7.7%), but the impact on the consolidated total was limited. Construction-industry-specific indicators show Advances received on uncompleted construction contracts of ¥360B, up +90.0% from ¥189B a year earlier, indicating accumulation of on-hand orders, while Advances paid on uncompleted construction contracts decreased to ¥203B from ¥241B (-15.7%), confirming accelerated project progress and improved working capital efficiency.
[Profitability] Gross profit on completed contract work expanded to ¥1,207B (¥929B in the prior year, +29.9%), outpacing revenue growth, and the gross profit margin on completed contract work improved to 16.3% from 13.8% (+2.5pt). Enhanced cost control and selective order intake toward higher-margin projects contributed to the rise in gross margin. Selling, general and administrative expenses were ¥376B (¥346B prior year, +8.7%) but rose more slowly than revenue, enabling operating leverage. As a result, Operating Income was ¥831B (¥583B prior year, +42.5%), and Operating Margin improved to 11.2% (up +2.5pt from 8.7%). Non-operating items were a small net positive of ¥18B, driven by dividend income ¥15B, securities interest ¥0.3B, and foreign exchange gains ¥4B; interest expense was modest at ¥3B. Extraordinary gains/losses were a net positive of ¥68B, with proceeds from sales of investment securities ¥78B as the largest contributor, partially offset by investment securities valuation losses ¥8B and impairment/asset retirement losses ¥7B. Profit before tax was ¥917B (¥616B prior year, +48.8%), and Net Income was ¥565B (¥373B prior year, +51.4%) after corporate taxes and other of ¥258B; Net Income attributable to owners of the parent was ¥635B (¥424B prior year, +49.9%), resulting in strong revenue growth and substantial profit increases.
The ENGINEERING segment drove results with Revenue of ¥7,318B (YoY +10.7%), Operating Income of ¥807B (YoY +43.1%), and an Operating Margin of 11.0% (up +1.7pt from 9.3%), serving as the core earnings engine. This segment, representing 98.6% of revenue, benefited from expanded orders and improved gross margins across electrical, piping, and other facility construction works. The Other Businesses segment recorded Revenue of ¥503B (YoY -7.7%) but turned profitable with Operating Income of ¥24B (YoY +25.1%), improving Operating Margin to 4.9% (up +1.3pt from 3.6%). This diversified business group includes electrical equipment sales, real estate, leasing, and power generation; despite reduced scale, efficiency gains were visible. At the consolidated level, Operating Income of ¥831B was composed of 97.1% from ENGINEERING, indicating a high concentration in the business portfolio.
[Profitability] Operating Margin was 11.2%, Ordinary Income Margin was 11.5%, and Net Margin was 7.6%, each improving by 2–3pt from the prior year (Operating 8.7%, Ordinary 8.9%, Net 5.6%). ROE was 13.9%, up 1.8pt from 12.1%, confirming improved returns on equity. ROA on an Ordinary Income basis improved to 13.7% from 10.2% (+3.5pt), indicating enhanced total asset efficiency. [Cash Quality] Operating Cash Flow (OCF) was ¥895B, 1.58x Net Income ¥565B, with an OCF/Net Income ratio of 158%, indicating strong cash-backed earnings. The accrual ratio ((Net Income ¥565B - OCF ¥895B) ÷ Total Assets ¥6,356B) = -5.2%, negative, indicating cash generation exceeded profit recognition and reflecting high-quality earnings. [Investment Efficiency] Total asset turnover improved to 1.17x (1.11x prior year), and Capital Expenditure was ¥158B, 1.45x depreciation ¥109B, maintaining a growth investment pace. [Financial Soundness] Equity Ratio was 63.8% (61.0% prior year), remaining high; Current Ratio was 192.1%, and Quick Ratio also 192.1%, indicating strong liquidity. Interest-bearing debt totaled Short-term Borrowings ¥61B + Long-term Borrowings ¥20B = ¥81B, against cash and deposits of ¥779B, resulting in an effectively near net cash position. Debt/Equity ratio was 2.0%, very low, and Interest Coverage was OCF ¥895B ÷ Interest Paid ¥3B = 263x, indicating very high interest-paying capacity.
Operating Cash Flow was ¥895B (up +389.8% from ¥183B prior year), demonstrating substantial increase and cash generation 1.58x Net Income ¥565B. Pre-working-capital subtotal of OCF was ¥1,129B, from which reductions in trade receivables ¥59B, decreases in trade payables -¥189B, increases in Advances received on uncompleted construction contracts (advance payments) +¥170B, and decreases in Advances paid on uncompleted construction contracts +¥38B contributed, resulting in a net inflow from working capital. Even after corporate tax payments of ¥247B, cash generation remained strong. Investing Cash Flow was -¥48B; CapEx was -¥158B, offset by proceeds from sale of investment securities and similar items ¥112B and loan repayments received ¥25B, limiting net outflow. Financing Cash Flow was -¥656B, driven primarily by share buybacks -¥300B, dividend payments -¥206B, net decrease in short-term borrowings -¥102B, and repayment of long-term borrowings -¥29B. Free Cash Flow was OCF ¥895B + Investing CF -¥48B = ¥846B, ample to cover shareholder returns of ¥506B (dividends + share buybacks), and cash and cash equivalents increased to ¥772B at year-end (from ¥578B at the beginning of the period, +¥193B).
Of Ordinary Income ¥850B versus Net Income ¥565B, the ¥285B difference was mainly due to corporate taxes and other ¥258B, with Extraordinary items contributing net +¥68B. The core of extraordinary gains was proceeds from sales of investment securities ¥78B, a one-time profit driver, while core earnings are represented by Operating Income ¥831B. Non-operating income ¥26B primarily comprised dividend income ¥15B, foreign exchange gains ¥4B, and securities interest ¥0.3B, each providing stable financial returns. Non-operating expenses ¥7B included interest expense ¥3B and foreign exchange losses ¥3B, a minor burden. Other comprehensive income was ¥757B, exceeding Net Income ¥565B; the ¥192B difference was mainly due to an increase in valuation differences on available-for-sale securities ¥98B, reflecting unrealized gains on held equities. With OCF at 1.58x Net Income and positive contributions from receivables, payables, and advances, cash backing of profits is strong. An accrual ratio of -5.2% indicates cash generation exceeds profit recognition, evidencing high-quality, sustainable value creation.
Full Year guidance is Revenue ¥7,800B (YoY +5.1%), Operating Income ¥900B (YoY +8.3%), Ordinary Income ¥905B (YoY +6.5%), and Net Income attributable to owners of the parent ¥587B (YoY +3.9%). Progress against the current-year results is 95.1% for Revenue, 92.4% for Operating Income, 93.9% for Ordinary Income, and 108.2% for Net Income attributable to owners of the parent, meaning Net Income has already exceeded the full-year forecast by 8.2%. Operating and Ordinary Income have also surpassed 90% of full-year guidance, making achievement of plan highly probable in the remaining quarter. The projected Revenue growth of +5.1% next fiscal year is somewhat conservative compared with this year’s +10.4%, and the assumed Operating Margin is around 11.5%, roughly in line with this year’s 11.2%. The lower projected Net Income growth of +3.9% versus Operating Income growth of +8.3% likely reflects the absence of one-time gains (this year’s proceeds from sales of investment securities ¥78B are not assumed for next year). Maintaining gross profit margin on completed contract work and controlling SG&A will remain key, and continued order environment strength and cost management are preconditions for achieving full-year guidance.
Dividends were ¥45 at Q2-end and ¥79 at year-end, totaling ¥124 for the year (including a ¥2 dividend commemorating the 80th anniversary), representing a Payout Ratio of 39.5%, an appropriate level. Prior-year total dividend was ¥26, so this year represents a substantial increase; excluding the commemorative ¥2, the base dividend of ¥122 still represents a year-on-year increase of ¥96. Next year’s dividend forecast is ¥65, which would be a reduction from this year’s base dividend ¥122, but excluding the commemorative dividend this is viewed as normalization to an appropriate payout level. Share buybacks of ¥300B were executed, and treasury stock increased from -¥5B at the beginning of the period to -¥305B at the end of the period. Total shareholder returns were Dividends ¥206B + Share Buybacks ¥300B = ¥506B, giving a Total Return Ratio of approximately 79.7% against Net Income attributable to owners of the parent ¥635B, a high level. Free Cash Flow ¥846B comfortably exceeds total returns ¥506B, supporting sustainability of dividends and buybacks. With cash and deposits ¥779B and a near net-cash balance sheet, continued stable shareholder returns and flexible capital policy are expected.
Cost Variation Risk: Provision for construction loss allowances is ¥74B (¥77B prior year), stable, but the sharp increase in Advances received on uncompleted construction contracts to ¥360B (up +90.0% from ¥189B) while indicating increased on-hand orders also implies risk that rising material and labor costs under fixed-price contracts could compress gross margins. Continuous cost control and pricing pass-through ability are essential to sustain the completed contract gross profit margin of 16.3%.
Segment Concentration Risk: ENGINEERING accounts for 98.6% of Revenue and 97.1% of Operating Income, creating high business concentration that makes performance directly sensitive to construction market supply-demand shifts and delays/cancellations of large projects. Other businesses account for only 1.4% of revenue, limiting diversification scope.
Short-term Liability Concentration Risk: Of Current Liabilities ¥2,071B, working liabilities such as Advances received on uncompleted construction contracts ¥360B and accounts payable ¥831B constitute the majority, and the short-term liability ratio is high at 75.2%. Although Current Assets ¥3,979B adequately cover these (Current Ratio 192%), seasonality of project progress and concentration of large projects could cause working capital volatility and impact liquidity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.2% | 5.5% (3.5%–7.2%) | +5.7pt |
| Net Margin | 7.6% | 3.5% (2.5%–4.4%) | +4.1pt |
Profitability significantly exceeds industry medians, maintaining top-class Operating and Net Margin levels.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.4% | 9.8% (-2.1%–15.1%) | +0.6pt |
Revenue growth slightly exceeds the industry median, achieving solid growth amid expanding construction demand.
※Source: Company compilation
Improvement in operating-stage profitability has been sustained, achieving a gross profit margin on completed contract work of 16.3% (up +2.5pt from 13.8%) and an Operating Margin of 11.2% (up +2.5pt from 8.7%), reaching industry-leading levels. The benefits of enhanced cost control and selective order intake are reflected in the numbers, and maintaining gross margin will be key to shareholder value creation.
Financial soundness and cash generation are extremely strong: effectively net cash (Interest-bearing debt ¥81B vs. Cash ¥779B), OCF ¥895B (1.58x Net Income), and FCF ¥846B provide high flexibility for capital policy. The company increased cash while executing share buybacks of ¥300B, indicating capacity for continued stable dividends and agile shareholder returns.
A one-time gain from sale of investment securities ¥78B was recognized as an extraordinary gain, but this is temporary; core future earnings depend on sustained operating-stage performance. Operating and Ordinary Income have already exceeded 90% of full-year guidance, and if order conditions and cost control continue, the likelihood of achieving guidance is high.
This report was auto-generated by AI analyzing XBRL financial statement data to produce a financial results commentary. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm from publicly disclosed financial statements. Investment decisions are the responsibility of the investor; please consult professional advisors as needed.