| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2292.1B | ¥2169.2B | +5.7% |
| Operating Income | ¥235.6B | ¥179.3B | +31.4% |
| Ordinary Income | ¥252.8B | ¥194.0B | +30.3% |
| Net Income | ¥172.1B | ¥114.3B | +50.5% |
| ROE | 7.5% | 5.5% | - |
For the fiscal year ended March 2026, Revenue was ¥2,292.1B (YoY +¥122.9B, +5.7%), Operating Income ¥235.6B (YoY +¥56.3B, +31.4%), Ordinary Income ¥252.8B (YoY +¥58.8B, +30.3%), and Net Income attributable to owners of the parent ¥172.1B (YoY +¥57.8B, +50.5%), achieving revenue and profit growth. Gross profit margin on completed construction improved to 17.9% (from 15.8% last year, +2.1pt), and the operating margin expanded to 10.3% (from 8.3% last year, +2.0pt). Extraordinary gains of ¥23.1B, including ¥22.8B gain on sale of investment securities, boosted pre-tax profit and drove Net Income to a strong YoY increase of +50.5%. While underlying earnings power clearly improved, Operating Cash Flow was only ¥105.2B (0.61x of Net Income), with increases in accounts receivable—completed construction receivables—and decreases in advance receipts increasing working capital burden.
[Revenue] Completed contract revenue totaled ¥2,292.1B, up +5.7% YoY. As a single-segment company (Equipment Construction Business), no regional or segmental breakdown is disclosed, but trade receivables (notes receivable and completed contract receivables) increased to ¥1,501.8B (+¥142.3B), suggesting accumulation of project progress and inspections toward period-end. Advance receipts (uncompleted contract deposits) were ¥27.4B, down -30.9% from ¥39.6B at prior year-end, implying order backlog digestion and a lower advance-receipt ratio on new contracts.
[Profitability] Cost ratio on completed construction improved to 82.1% (from 84.2% last year), a 2.1pt improvement, securing gross profit on completed construction of ¥409.2B (gross margin 17.9%). SG&A was ¥173.6B (7.6% of sales, +0.1pt from 7.5% last year), largely flat, and gross margin improvement flowed through to Operating Income. Operating Income rose to ¥235.6B (+31.4%), with an operating margin of 10.3% (+2.0pt), showing clear margin improvement. Non-operating income of ¥18.0B (dividend income ¥11.8B, interest income ¥2.1B) lifted Ordinary Income to ¥252.8B (+30.3%). Extraordinary gains of ¥23.1B (gain on sale of investment securities ¥22.8B) raised profit before tax to ¥270.9B (+¥50.7B, +23.0%). After deducting corporate taxes of ¥82.4B (effective tax rate 30.4%) and non-controlling interests of ¥7.8B, profit attributable to owners of the parent was ¥172.1B (+50.5%), ending the year with revenue and profit growth.
[Profitability] Operating margin of 10.3% improved +2.0pt from 8.3% last year, mainly due to expansion of completed construction gross margin to 17.9% (from 15.8%). Net margin of 7.5% (up +2.2pt from 5.3%) includes contribution from extraordinary gains, while Ordinary Income margin of 11.0% (up +2.1pt from 8.9%) indicates sustained improvement at the operating level. ROE 7.5% (prior year 6.9%) rose on improved net margin. [Cash Quality] Operating CF to Net Income ratio is weak at 0.61x (Operating CF ¥105.2B ÷ Net Income ¥172.1B), with increases in trade receivables -¥141.2B and increases in trade payables +¥42.9B resulting in working capital cash outflow of -¥98.3B. OCF/EBITDA ratio is low at 0.37x (EBITDA = Operating Income ¥235.6B + Depreciation ¥51.1B = ¥286.7B), indicating weak cash conversion. [Investment Efficiency] Total asset turnover is 0.69x (Revenue ¥2,292.1B ÷ Total assets at period-end ¥3,337.9B), slowing from 0.73x last year as total assets increased faster than sales. Capital expenditure ¥58.5B exceeded depreciation ¥51.1B (ratio 1.14x), indicating somewhat proactive maintenance/replacement investment. [Financial Soundness] Equity Ratio is high at 69.1% (prior year 70.7%). Interest-bearing debt consists only of short-term borrowings of ¥122.0B, up +¥81.0B from ¥41.0B a year earlier. Debt/EBITDA is 0.43x, and Interest Coverage is strong at 298x (Operating Income ¥235.6B ÷ Interest expense ¥0.8B), indicating ample financial capacity. Current ratio is 232.2% (current assets ¥2,025.1B ÷ current liabilities ¥872.2B), showing solid short-term solvency.
Operating CF was ¥105.2B, a substantial improvement from -¥43.4B the prior year, but conversion against Net Income of ¥172.1B is weak at 0.61x. Cash generated at the subtotal stage was ¥161.4B (adjusting profit before tax ¥270.9B for non-cash items such as depreciation ¥51.1B), from which working capital changes—accounts receivable increase -¥141.2B (accumulation of completed construction receivables) and accounts payable increase +¥42.9B—led to working capital outflow of -¥98.3B, and after corporate tax payments -¥69.3B, Operating CF of ¥105.2B was secured. Investing CF was -¥47.0B, driven mainly by capital expenditure -¥58.5B (primarily acquisition of tangible fixed assets), partially offset by net proceeds from sale of securities and investment securities +¥28.8B and acquisitions -¥18.0B, net +¥10.8B. Free Cash Flow was ¥58.2B (prior year -¥101.5B), turning positive. Financing CF was +¥19.4B, as net increase in short-term borrowings +¥81.0B exceeded dividend payments -¥54.1B and treasury stock repurchases -¥6.4B. Cash and cash equivalents at period-end rose to ¥337.1B (prior year ¥259.5B, +¥77.6B), leaving ample liquidity. Progress in recovering working capital will be key to improving cash conversion.
Earnings growth at the operating level was mainly driven by a 2.1pt improvement in gross margin on completed construction, reflecting sustainable improvement in underlying profitability. However, extraordinary gains of ¥23.1B (¥22.8B of which was gain on sale of investment securities) accounted for roughly 8.5% of pre-tax profit of ¥270.9B, indicating significant one-off contribution. Non-operating income of ¥18.0B (dividend income ¥11.8B, interest income ¥2.1B) represents stable income from held securities, but sale gains lack continuity. Low Operating CF to Net Income ratio of 0.61x and OCF/EBITDA of 0.37x point to accrual-quality issues. The main driver is the increase in completed construction receivables -¥141.2B, suggesting timing shifts in inspections and extension of collection terms. The gap between Ordinary Income ¥252.8B and Net Income ¥172.1B is explainable by the effective tax rate of 30.4% and net extraordinary items (extraordinary gains ¥23.1B - extraordinary losses ¥5.0B = +¥18.1B). Core earnings improvements are confirmed, but strengthening cash backing is necessary.
Against the full-year forecast (Revenue ¥2,423.1B, Operating Income ¥238.9B, Ordinary Income ¥257.1B, Net Income ¥172.4B, EPS ¥316.42, Dividend ¥127), actuals achieved: Revenue ¥2,292.1B (achievement 94.6%), Operating Income ¥235.6B (98.6%), Ordinary Income ¥252.8B (98.3%), Net Income ¥172.1B (99.8%), EPS ¥309.26 (97.7%), Dividend ¥124 (97.6%). Revenue missed forecast by -5.4%, but Operating Income and below were nearly achieved. Improvement in gross margin on completed construction and gain on sale of investment securities compensated for revenue shortfall. The increase in completed construction receivables suggests timing lag in inspections, and unmet revenue is presumed carried over to the following fiscal year. Next fiscal year’s plan assumes maintenance of project profitability and progress in inspections to achieve targets.
Year-end dividend was ¥124 per share. Total dividend payments of ¥54.2B against Net Income ¥172.1B imply a payout ratio of 40.2%. Dividend payments ¥54.1B cover most of Free Cash Flow ¥58.2B (FCF coverage 93.0%). Including ¥6.4B of treasury stock repurchases, Total Return Ratio is 35.1% (total return ¥60.6B ÷ Net Income ¥172.1B), which is 104.0% relative to FCF and roughly within range. Shares outstanding are 61,537 thousand, treasury stock 3,165 thousand, with weighted average shares during the period of 58,400 thousand. Dividend forecast is ¥127 (payout ratio 40.1%), maintaining current level. High financial soundness limits near-term dividend cut risk, but in the medium term recovery of working capital and stable OCF generation are key to dividend sustainability.
Deterioration of project profitability: Although completed construction gross margin improved to 17.9%, volatility in material and subcontracting costs and cost increases under fixed-price contracts could compress gross profit. Provisions for construction losses are ¥1.2B (down -76.1% from ¥5.1B), but additional costs and penalties could materialize if large projects face delays or specification changes.
Increasing working capital burden: Increase in completed construction receivables -¥141.2B has pressured Operating CF, and short-term borrowings rose to ¥122.0B (up +¥81.0B from ¥41.0B). If prolonged collection cycles or inspection delays continue, liquidity stress and refinancing risk could increase.
Valuation fluctuation risk on investment securities: Investment securities total ¥518.5B (15.5% of total assets), up +¥105.4B year-on-year. Valuation gains of ¥66.3B boosted comprehensive income, but market deterioration could cause valuation losses and reduce equity. Reliance on sale gains of ¥22.8B raises the risk that one-off income will not recur and may pressure profits in subsequent periods.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.3% | 5.5% (3.5%–7.2%) | +4.7pt |
| Net Margin | 7.5% | 3.5% (2.5%–4.4%) | +4.0pt |
The company’s profitability ranks in the upper tier within the industry, with Operating and Net margins substantially above medians.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.7% | 9.8% (-2.1%–15.1%) | -4.2pt |
Revenue growth lags the industry median, indicating a slower growth pace versus peers.
※Source: Company aggregation
Improvement in completed construction gross margin to 17.9% (from 15.8%, +2.1pt) and operating margin to 10.3% (+2.0pt) clearly indicate improved profitability and uplift in underlying earnings power. Gross margin improvement drove the strong Operating Income growth of +31.4%, demonstrating strengthened project management and cost control. Against industry benchmarks, an Operating Margin of 10.3% exceeds the median 5.5% by +4.7pt, placing the company among the industry’s higher-performing peers on profitability.
Operating CF of ¥105.2B (0.61x of Net Income) and OCF/EBITDA of 0.37x are low, with increases in completed construction receivables -¥141.2B pressuring working capital. Short-term borrowings increased to ¥122.0B (up +¥81.0B), heightening reliance on external funding. Next fiscal year’s improvement in cash conversion depends on recovery of receivables and buildup of advance receipts.
This report was 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 from public financial statements. Investment decisions are your responsibility; consult specialists as needed.