| Metric | This 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 (for JGAAP) | ¥849.8B | ¥595.0B | +42.8% |
| Net Income / Net Profit | ¥565.2B | ¥373.2B | +51.4% |
| ROE | 13.9% | 9.8% | - |
For the full year ending March 2026, Revenue was ¥7,420.2B (YoY +¥701.3B +10.4%), Operating Income was ¥831.4B (YoY +¥248.1B +42.5%), Ordinary Income was ¥849.8B (YoY +¥254.8B +42.8%), and Net Income attributable to owners of the parent was ¥635.2B (YoY +¥191.4B +49.9%), achieving higher revenue and significantly higher profits. Operating margin improved to 11.2% (up +2.5pt from 8.7% the prior year), and net margin improved to 8.6% (up +2.4pt from 6.2%), indicating a substantial improvement in profitability. The core Engineering (equipment construction) segment drove performance with Revenue of ¥7,317.8B (+10.7%) and Operating Income of ¥806.9B (+43.1%, margin 11.0%), and Gross Profit on Completed Construction rose to 16.3% (prior year 13.8%)—an expansion of +2.5pt. Operating Cash Flow (OCF) increased significantly to ¥894.5B (YoY +389.8%), securing Free Cash Flow (FCF) of ¥846.2B. Dividends were ¥124 per share for the full year (¥79 at year-end), representing a payout ratio of 39.5%. Share buybacks totaling ¥300.0B were executed, reflecting proactive shareholder returns. Progress against the full-year guidance (Revenue ¥780.0B, Operating Income ¥90.0B, Net Income ¥58.7B) was approximately: Revenue 95.1%, Operating Income 92.4%, Net Income 96.3%.
[Revenue] Revenue was ¥7,420.2B (YoY +10.4%), achieving double-digit growth. The core Engineering (equipment construction) segment (ENGINEERING) led growth with ¥7,317.8B (+10.7%), accounting for 98.6% of total Revenue. Growth was supported by increased completed construction volume and contributions from large projects. Other businesses (electrical equipment sales, real estate, leasing, power generation) contracted to ¥502.5B (-7.7%), but had limited impact on the group as a whole. Gross Profit on Completed Construction expanded to ¥1,207.1B (from ¥929.2B prior year, +29.9%), outpacing Revenue growth, and Gross Profit on Completed Construction margin improved to 16.3% (from 13.8%, +2.5pt). This margin improvement is attributed to rigorous cost management and successful passing through of price increases. Contract work-in-progress payments decreased to ¥203.4B (from ¥241.4B at prior fiscal year-end, -15.7%), indicating healthier project progress.
[Profitability] Operating Income rose to ¥831.4B (YoY +42.5%), with Operating margin at 11.2% (up +2.5pt from 8.7%), showing significant improvement. The primary driver was the 2.5pt improvement in Gross Profit on Completed Construction margin. SG&A expenses were ¥375.7B (up from ¥345.9B prior year, +8.6%) and rose with Revenue, but their increase was contained below the Revenue growth rate of +10.4%, allowing operating leverage to take effect. SG&A ratio remained at 5.1% (flat YoY). Non-operating items contributed a net +¥18.4B, with dividend income of ¥15.1B and foreign exchange gains of ¥3.8B contributing. Interest expense was minor at ¥3.4B, and interest coverage was 243x, indicating extremely light financial burden. Ordinary Income was ¥849.8B (+42.8%), with an Ordinary Income margin of 11.5% (up +2.6pt from 8.9%). Extraordinary items included gain on sale of investment securities of ¥77.9B, comprising the majority of Special Gains of ¥84.3B; Special Losses totaled only ¥16.8B, including impairment losses on investment securities of ¥8.4B. Net special items contributed +¥67.5B, but this was a one-off factor. Profit before income taxes was ¥917.3B (from ¥616.4B prior year, +48.8%), with income taxes of ¥258.2B (effective tax rate 28.1%), resulting in Net Income attributable to owners of the parent of ¥635.2B (+49.9%), and net margin of 8.6% (from 6.3%, +2.3pt). In summary, substantial improvement in Gross Profit on Completed Construction centered in the Engineering segment and operating leverage drove higher revenue and significantly higher profits.
The Engineering (equipment construction) segment reported Revenue of ¥7,317.8B (YoY +10.7%), Operating Income of ¥806.9B (YoY +43.1%), and Operating margin of 11.0% (up +2.5pt from 8.5%), serving as the primary segment driving substantial profit growth. Improvement in Gross Profit on Completed Construction margin and rigorous cost management were the main factors behind margin expansion. The segment accounted for 98.6% of Revenue and is the core of group earnings. Other businesses reported Revenue of ¥502.5B (-7.7%), Operating Income of ¥24.5B (+25.1%), and Operating margin of 4.9% (up +1.3pt from 3.6%). Although the scale shrank, profitability improved. With a 1.4% share of Revenue, the impact on the group is limited. The group is highly dependent on the Engineering segment; therefore, order trends and profitability management in that segment determine group performance.
[Profitability] Operating margin was 11.2% (up +2.5pt from 8.7%), and net margin was 8.6% (up +2.3pt from 6.3%), showing significant improvement. ROE reached 15.7% (up +3.6pt from 12.1%), a strong level, and ROA (on an Ordinary Income basis) was 13.7% (up +3.5pt from 10.2%), indicating improved asset efficiency. The ROE improvement was primarily driven by the expansion of net margin (+2.3pt), while financial leverage remained nearly unchanged at 1.57x (prior year 1.59x). [Cash Quality] Operating Cash Flow was ¥894.5B, 1.41x Net Income, and Operating CF/EBITDA ratio was 0.95x, demonstrating high cash generation capacity. The accrual ratio was -4.1%, indicating very strong cash backing for reported profits. Depreciation was ¥108.6B versus capital expenditures of ¥157.8B (1.45x), indicating growth investments exceeding maintenance. [Investment Efficiency] Total asset turnover improved to 1.17x (from 1.11x), and Days Sales Outstanding shortened to 131 days (from 148), indicating improved asset efficiency. Dividend income was ¥15.1B, and investment securities totaled ¥774.0B, implying an investment dividend yield of 1.95% and stable financial income. [Financial Soundness] Equity Ratio was 63.8% (up +2.8pt from 61.0%), remaining high. The company is effectively debt-free, with Debt/EBITDA at 0.09x and Interest Coverage at 243x, indicating minimal financial burden. Current ratio was 192.1%, and quick ratio also 192.1%, showing solid liquidity.
Operating Cash Flow was ¥894.5B (from ¥182.6B prior year, +389.8%), a substantial increase and 1.41x Net Income, demonstrating high-quality cash generation. Operating CF subtotal (before working capital changes) was ¥1,128.7B, from which net working capital changes and corporate tax payments produced the reported OCF. In working capital, advance receipts (contract work-in-progress receipts) increased significantly to ¥359.9B (from ¥189.4B at prior year-end, +90.0%, an increase of ¥170.5B), contributing cash inflows related to project orders. Contract work-in-progress payments decreased to ¥203.4B (from ¥241.4B at prior year-end, -15.7%, a cash inflow of ¥38.0B), reflecting healthier project progress. Accounts receivable increased only by ¥59.3B, and accounts payable decreased by ¥189.4B, but increases in advance receipts and decreases in contract work-in-progress payments produced a net positive contribution to working capital. Corporate tax payments totaled ¥247.3B. Investing Cash Flow was -¥48.4B, driven mainly by capital expenditures of ¥157.8B, but proceeds from sale of investment securities of ¥112.4B and recovery of long-term loans of ¥24.6B generated inflows, leaving a modest net outflow. Free Cash Flow was ¥846.2B (Operating CF + Investing CF), ample to cover dividends of ¥206.4B and share buybacks of ¥300.0B (total ¥506.4B), while still increasing cash balances. Financing Cash Flow was -¥656.4B, primarily due to share buybacks of ¥300.0B, dividends of ¥206.4B, net reduction in short-term borrowings of ¥102.0B, and repayment of long-term borrowings of ¥28.6B. Cash and cash equivalents increased from ¥577.9B at the beginning of the period to ¥771.5B at the end of the period (+¥193.2B), including foreign exchange impact of ¥3.4B, substantially improving liquidity.
Ordinary Income of ¥849.8B versus Net Income of ¥635.2B shows only limited divergence, indicating high quality of core earnings. Non-operating items contributed net +¥18.4B, centered on recurring items such as dividend income of ¥15.1B and foreign exchange gains of ¥3.8B, indicating high stability. Special items contributed net +¥67.5B, mainly due to gain on sale of investment securities of ¥77.9B, but this is a one-off factor. Special losses, including impairment losses on investment securities of ¥8.4B, were limited to ¥16.8B, containing loss risk. Comprehensive income was ¥756.0B (¥728.8B attributable to owners of the parent), exceeding Net Income, with valuation differences on available-for-sale securities of +¥97.7B boosting comprehensive income—this reflects unrealized gains on held securities, not realized profits. Operating CF of ¥894.5B being 1.41x Net Income and an accrual ratio of -4.1% indicate strong cash backing of profits and high alignment between accounting profit and actual cash flows. Operating CF/EBITDA ratio of 0.95x is a strong level; considering non-cash charges such as depreciation, cash conversion is favorable. Days Sales Outstanding shortened to 131 days (from 148), and provision for construction loss reserves was ¥73.5B (from ¥76.9B, -4.5%), indicating improvement in receivables and reserves quality; overall, the quality of earnings is assessed as high.
Full-year guidance announced: Revenue ¥780.0B (YoY +5.1%), Operating Income ¥90.0B (YoY +8.3%), Ordinary Income ¥90.5B (YoY +6.5%), and Net Income attributable to owners of the parent ¥58.7B (YoY +3.9%). Progress against the current period results was: Revenue 95.1%, Operating Income 92.4%, Ordinary Income 93.9%, Net Income 108.2%—Revenue and operating-stage profits fell slightly short of guidance, while Net Income exceeded guidance by 8.2%. Contribution from Special Gains (gain on sale of investment securities ¥77.9B) boosted Net Income. Next fiscal year projected EPS is ¥326.61 versus current period EPS of ¥311.77. Next fiscal year forecast dividend is ¥65 versus current period actual dividend of ¥124 (year-end ¥79); the current period includes a ¥2 commemorative dividend for the 80th anniversary, implying an effective recurring dividend of ¥122 and next year is expected to return to a standard level. Next year growth is forecast Revenue +5.1% and Operating Income +8.3%, implying continued revenue and profit growth; given this period’s substantial margin improvement (Operating margin +2.5pt), next year is likely modeled on maintaining or slightly increasing margins. Sustainability of Gross Profit on Completed Construction margin, trends in materials and labor costs, and the order environment will be key to next year’s results.
Dividends were ¥79 at year-end and ¥45 interim, total ¥124 (prior year included a year-end ¥26, current period includes a ¥2 80th anniversary commemorative dividend in the year-end ¥79). Payout ratio was 39.5% (based on Net Income attributable to owners of the parent ¥635.2B and total dividends equivalent to ¥253.6B), a sustainable level. With FCF of ¥846.2B and dividends of ¥206.4B, FCF coverage was 4.1x, indicating ample capacity. Share buybacks of ¥300.0B were executed, and treasury stock at year-end was ¥305.1B (up substantially from ¥5.1B at prior year-end). The combined dividends of ¥206.4B and share buybacks of ¥300.0B totaled ¥506.4B in total returns, representing a Total Return Ratio of approximately 79.7% relative to Net Income attributable to owners of the parent ¥635.2B, demonstrating an aggressive shareholder return stance. Next year dividend forecast is ¥65, down from ¥124 this year, reflecting the lapse of the commemorative dividend and a return to standard levels. Maintaining a payout ratio around 39.5% is expected, with continued stable dividends and opportunistic share buybacks.
Cost Volatility Risk: The Gross Profit on Completed Construction margin of 16.3% (up +2.5pt from 13.8%) reflects cost management success, but sustained upward pressure on materials prices and subcontracting costs could compress margins. Provision for construction losses of ¥73.5B (from ¥76.9B) decreased, but cost overruns on fixed-price contracts remain a constant risk. Although contract work-in-progress payments at ¥203.4B improved YoY (-15.7%), delays in large projects or procurement difficulties could reintroduce inventory risk.
Segment Concentration Risk: The Engineering segment accounts for 98.6% of Revenue and 97.1% of Operating Income, indicating extremely high segment dependence. Deterioration in order conditions or profitability in this segment directly affects consolidated results. Other businesses’ Revenue of ¥502.5B (-7.7%) has contracted, and business portfolio diversification remains limited. With a margin gap between Engineering (11.0%) and Other Businesses (4.9%), maintaining Engineering segment margins is key to overall profitability.
Short-term Debt Concentration Risk: Current liabilities are ¥2,071.0B against current assets of ¥3,978.7B, yielding a current ratio of 192.1% and appearing healthy, but short-term liabilities account for 75.2% of total debt, indicating a short-term bias in the liability structure. Advance receipts (contract work-in-progress receipts) of ¥359.9B are part of current liabilities and may turn into cash outflows as projects progress. Cash of ¥779.4B covers short-term liabilities, but abrupt changes in the order environment or project delays could strain working capital.
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 |
The company significantly outperforms the industry median and ranks among the top in profitability within the construction sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.4% | 9.8% (-2.1%–15.1%) | +0.6pt |
Revenue growth is roughly in line with the industry median, maintaining stable growth.
※ Source: Company compilation
Gross Profit on Completed Construction margin of 16.3% (up +2.5pt from 13.8%) reflects rigorous cost management and successful price pass-through, delivering an industry-leading Operating margin of 11.2% (up +2.5pt from 8.7%). ROE of 15.7% (up +3.6pt from 12.1%) demonstrates high capital efficiency and strengthened shareholder value creation. Next year’s guidance assumes maintaining Operating margin; trends in materials and labor costs and selective order-taking will be key to sustaining margins.
With OCF of ¥894.5B (1.41x Net Income) and FCF of ¥846.2B, the company executed total returns of ¥506.4B (dividends ¥206.4B and share buybacks ¥300.0B), representing a Total Return Ratio of 79.7%, supported by a healthy balance sheet (Equity Ratio 63.8%, effectively debt-free) and strong liquidity (cash ¥779.4B, current ratio 192.1%). This supports continued capacity for shareholder returns. Next year dividend forecast of ¥65 reflects the absence of the commemorative dividend and a reversion to standard levels, with an expected payout ratio around 40%.
Extremely high dependence on the Engineering segment at 98.6% means that order trends and profitability management in that segment will determine group performance. A large increase in contract work-in-progress receipts to ¥359.9B (YoY +90.0%) suggests strong order intake, but project progress and cost control will determine future margins. Provision for construction losses of ¥73.5B (from ¥76.9B, -4.5%) has improved, but profitability volatility on large projects requires ongoing monitoring.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings flash data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are compiled by the Company based on publicly disclosed financial statements and are provided for reference. Investment decisions are your own responsibility; please consult a professional advisor as necessary before making investment decisions.