| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1048.2B | ¥919.5B | +14.0% |
| Operating Income / Operating Profit | ¥116.8B | ¥72.5B | +61.2% |
| Ordinary Income | ¥120.3B | ¥75.8B | +58.7% |
| Net Income / Net Profit | ¥92.1B | ¥61.0B | +51.0% |
| ROE | 18.1% | 14.5% | - |
For the fiscal year ended March 2026, Revenue was ¥1,048.2B (YoY +¥128.8B, +14.0%), Operating Income was ¥116.8B (YoY +¥44.3B, +61.2%), Ordinary Income was ¥120.3B (YoY +¥44.5B, +58.7%), and Net Income was ¥92.1B (YoY +¥31.1B, +51.0%), delivering significant top-line and profit growth. Operating margin improved from 7.9% to 11.1% (+3.2pt) and Net profit margin improved from 6.6% to 8.8% (+2.2pt), indicating qualitative improvement in profitability. The core Equipment Construction Business drove corporate profits with Revenue of ¥991.4B (+15.1%) and Operating Income of ¥117.8B (+54.9%), while the Equipment Manufacturing & Sales Business recorded Revenue of ¥56.8B (-2.6%) and an operating loss of ¥1.0B, with the loss narrowing year-on-year. The gross completion profit margin improved to 20.9% (prior year 17.4%) (+3.5pt), with improved project profitability the primary driver of margin expansion. Operating Cash Flow (OCF) was ¥127.3B (YoY +897.8%), significantly exceeding Net Income and Free Cash Flow (FCF) was ¥72.6B, comfortably covering dividend payments of ¥37.4B and demonstrating high-quality cash generation. ROE rose to 18.1%; combined with a conservative financial base — Equity Ratio 50.5% and Cash & Deposits ¥263.9B — the results balanced capital efficiency and financial soundness.
[Revenue] Revenue was ¥1,048.2B (+14.0%), marking the second consecutive year of growth. The core Equipment Construction Business achieved ¥991.4B (+15.1%), accounting for 94.6% of consolidated Revenue and driving growth as the primary revenue source. The Equipment Manufacturing & Sales Business declined to ¥56.8B (-2.6%), but its impact on consolidated results was limited. In Equipment Construction, Completed Contract Revenue increased by ¥130.3B YoY, supported by an improved mix between private-sector and government/public-sector projects and broader order growth. Although regional and industry breakdowns were not disclosed in detail, Uncompleted Contract Liabilities increased to ¥45.1B (YoY +41.1%), supporting the view of growing backlog and advance receipts for projects in progress.
[Profitability] Cost of sales was ¥833.8B, producing Gross Profit of ¥214.5B (gross margin 20.5%), a 3.8pt improvement from the prior year gross margin of 16.7%. The completed contract gross profit margin in construction accounting also rose to 20.9% (prior year 17.4%) (+3.5pt), with improved project profitability and strengthened cost control as the main drivers of improved profitability. SG&A was ¥97.6B (SG&A ratio 9.3%), up ¥16.6B YoY (+20.4%), but gross margin expansion outpaced SG&A increases, resulting in Operating Income of ¥116.8B (operating margin 11.1%), a substantial YoY increase of +61.2%. Non-operating income totaled ¥4.7B (including dividend income ¥3.1B), non-operating expenses were ¥1.2B (including interest expense ¥0.8B), yielding a net positive contribution of ¥3.5B and Ordinary Income of ¥120.3B (+58.7%). Extraordinary gains of ¥5.6B (gain on sale of investment securities ¥5.6B) and extraordinary losses of ¥1.2B (impairment of investment securities ¥0.2B, etc.) were recorded, resulting in Profit before Income Taxes of ¥124.7B and, after income taxes of ¥32.3B, Net Income of ¥92.1B (+51.0%). By segment, Equipment Construction generated Operating Income of ¥117.8B (margin 11.9%), up +54.9% YoY, while Equipment Manufacturing & Sales recorded an operating loss of ¥1.0B (previous year loss ¥3.6B). In conclusion, improved profitability in the core business drove revenue and profit growth; while one-off gains from sale of investment securities were included, operating-level profitability improvement was the main engine of profit growth.
The Equipment Construction Business achieved Revenue of ¥991.4B (+15.1%) and Operating Income of ¥117.8B (+54.9%, margin 11.9%), becoming the effective source of consolidated Operating Income. This is a marked improvement from the prior year Operating Income of ¥76.1B and margin 8.8%, driven by improved project profitability and enhanced construction efficiency. The completed contract gross profit margin rose to 20.9% (prior year 17.4%) (+3.5pt), attributable primarily to a better project mix and strengthened cost management. The Equipment Manufacturing & Sales Business recorded Revenue of ¥56.8B (-2.6%) and an operating loss of ¥1.0B (prior year loss ¥3.6B); although Revenue declined, the deficit narrowed. Its margin remains negative at -1.8%, still unprofitable but improved from -6.1% the prior year. Demand trends for precision environmental control equipment for semiconductor and FPD manufacturing equipment likely influenced performance, though detailed drivers were not disclosed. Segment assets were ¥550.7B for Equipment Construction and ¥76.1B for Equipment Manufacturing & Sales, with adjustments of ¥380.2B (cash & deposits, investment securities, etc.), bringing Total Assets to ¥1,006.9B. High margins in Equipment Construction and narrowing losses in Equipment Manufacturing & Sales contributed to a consolidated Operating margin of 11.1%.
[Profitability] Operating margin 11.1% (prior year 7.9%, +3.2pt), Net margin 8.8% (prior year 6.6%, +2.2pt), completed contract gross profit margin 20.9% (prior year 17.4%, +3.5pt), confirming multi-level improvements in profitability. ROE was 18.1%, which can be decomposed as Net margin 8.8% × Total Asset Turnover 1.04 × Financial Leverage 1.98. The primary driver of ROE improvement was the rise in Net margin, supported by improved project profitability and rigorous cost control. The SG&A ratio rose to 9.3% from 8.8% (+0.5pt), but gross margin expansion more than offset this, delivering operating leverage. [Cash Quality] Operating Cash Flow ¥127.3B is 1.38x Net Income ¥92.1B, and Cash Conversion (OCF/EBITDA) is 1.03x, remaining at a high level. The accrual ratio is -3.5%, indicating high quality of earnings. Depreciation was ¥7.1B versus capital expenditures of ¥38.4B, showing an aggressive investment stance, but FCF of ¥72.6B was generated, covering dividend payments of ¥37.4B by 1.94x. [Investment Efficiency] With Total Assets ¥1,006.9B and Revenue ¥1,048.2B, Total Asset Turnover is 1.04x. Capital expenditures are 5.4x depreciation, indicating growth-oriented investment. Investment securities increased to ¥154.4B (YoY +56.9%) and generated dividend income of ¥3.1B, but exposure to market price volatility should be noted. [Financial Soundness] Equity Ratio 50.5%, D/E ratio 0.14 (interest-bearing debt ¥69.5B / Net Assets ¥508.6B), Debt/EBITDA 0.56x, Interest Coverage 155.8x — the financial base is extremely solid. Cash & Deposits are ¥263.9B; Cash/Short-term Borrowings is 8.2x (short-term borrowings ¥32.0B), indicating ample liquidity. Long-term borrowings increased to ¥37.5B (YoY +1,814.8%), but the amount remains small and the burden limited. Current ratio 161.5% and Quick ratio 161.5% indicate low short-term liquidity risk.
Operating Cash Flow was ¥127.3B (YoY +897.8%), a significant increase and 38.2% higher than Net Income ¥92.1B, reflecting high-quality cash generation. Operating Cash Flow before changes in working capital was ¥151.3B, and changes in working capital — accounts receivable up ¥20.2B, accounts payable up ¥47.0B, uncompleted contract liabilities up ¥13.1B — helped convert Profit before Income Taxes ¥124.7B into OCF. After consideration of corporate tax payments ¥26.6B, dividend receipts ¥3.4B, and interest paid ¥0.7B, OCF improved substantially from ¥12.8B in the prior year. Investing Cash Flow was -¥54.7B, driven mainly by capital expenditures ¥38.4B and acquisition of investment securities ¥24.2B, partly offset by proceeds from sale of investment securities ¥7.3B. Financing Cash Flow was +¥5.0B, reflecting borrowings of long-term debt ¥47.0B, dividend payments ¥37.4B, and a net decrease in short-term borrowings ¥1.0B. FCF, the sum of OCF and Investing CF, was ¥72.6B, covering dividend payments of ¥37.4B by 1.94x. Cash and cash equivalents increased by ¥78.8B from ¥183.9B at the beginning of the period to ¥262.7B at the end of the period, including foreign exchange effects of ¥1.2B, maintaining abundant liquidity.
Of Ordinary Income ¥120.3B, Operating Income ¥116.8B was the primary component; non-operating income ¥4.7B (dividend income ¥3.1B, interest income ¥0.2B, etc.) made a limited contribution. Non-operating income accounted for 0.4% of Revenue, well below 5%, indicating a very high dependence on core operations. Extraordinary items comprised extraordinary gains ¥5.6B (gain on sale of investment securities ¥5.6B) and extraordinary losses ¥1.2B (impairment of investment securities ¥0.2B, etc.), with a net positive effect of ¥4.4B on Net Income; however, this is only 3.5% of Profit before Income Taxes and thus a transitory factor. The gap between Ordinary Income ¥120.3B and Net Income ¥92.1B is explained by tax expense ¥32.3B (effective tax rate 25.9%), with no structural divergence observed. The accrual ratio is low at -3.5%, and OCF ¥127.3B exceeds Net Income ¥92.1B (OCF/NI = 1.38x), indicating strong cash conversion of earnings. Comprehensive income was ¥122.4B; the difference from Net Income ¥92.1B (¥30.3B) was attributable to valuation differences on securities ¥23.1B, actuarial gains/losses on retirement benefits ¥6.6B, and foreign currency translation adjustments ¥0.3B — items that do not involve cash inflows. Overall, operating-level profitability improvement is the main driver of profit growth, and excluding the one-off gain on sale of investment securities, recurring earnings power remains at a high level.
The company’s plan for the fiscal year ending March 2027 is Revenue ¥1,125.0B (+7.3%), Operating Income ¥122.0B (+4.4%), Ordinary Income ¥124.0B (+3.1%), and Net Income ¥90.5B (-1.8%). While top-line growth is projected to be solid, Net Income is expected to slightly decline. Progress against the current fiscal year’s results is approximately: Revenue 93.2%, Operating Income 95.7%, Ordinary Income 97.3%, Net Income 101.8%, suggesting conservative guidance. The anticipated decline in Net Income is likely due to the drop-off of one-off items recorded this fiscal year, such as the ¥5.6B gain on sale of investment securities. EPS is projected at ¥357.48, and dividends are planned at ¥144 per year (interim ¥72, year-end ¥72), implying a Payout Ratio of 40.3%, down from 49.6% in the current fiscal year. Operating margin is planned to slightly decline to 10.8%, though the company likely assumes maintaining some of the current period’s improved project profitability. Key areas to watch next year are order trends in the core Equipment Construction Business, maintenance of project mix, responses to cost and labor inflationary pressures, and the pace of profitability recovery in the Equipment Manufacturing & Sales Business.
Annual dividend was ¥144 (interim ¥50, year-end ¥94), resulting in a Payout Ratio of 49.6%. The prior year dividend was ¥50 (interim ¥25, year-end ¥25) with a Payout Ratio of 49.6%; while total dividend amount rose substantially, the Payout Ratio remained at a similar level. The year-end dividend of ¥94 includes ordinary dividend ¥25, special dividend ¥50, and a ¥19 dividend commemorating the 100th anniversary, reflecting a temporary increase. DOE (dividend on equity) was 7.6%, representing shareholder returns aligned with improved capital efficiency. Against FCF ¥72.6B, dividend payments ¥37.4B represent an FCF coverage ratio of 1.94x, indicating ample capacity. No share buybacks were executed; returns are currently dividend-focused. Next fiscal year’s plan is annual dividend ¥144 (interim ¥72, year-end ¥72), lowering Payout Ratio to 40.3% while signaling continuation of a stable dividend policy. Retained earnings rose to ¥373.8B (YoY +¥55.0B), strengthening the financial base while balancing capital expenditure and dividends.
Segment Concentration Risk: The Equipment Construction Business accounts for 94.6% of Revenue and effectively over 100% of Operating Income, resulting in earnings highly correlated with specific markets and project trends. Slowdown in private capital expenditures or deterioration in the bidding environment for government projects could significantly impact consolidated results. Project profitability volatility is also a high risk; the completed contract gross profit margin, which improved to 20.9% this year, could decline in the future, so margin volatility should be monitored.
Cost Inflation Risk: SG&A increased YoY by +20.4%, outpacing Revenue growth of +14.0%, with apparent upward pressure on labor and overhead costs. If the construction industry’s ongoing rise in labor and material costs cannot be fully passed through to customers, the gross margin improvements achieved this fiscal year may be eroded. Provision for construction losses decreased to ¥0.5B (from ¥2.7B, -82.1% YoY), but may need to be increased again if project profitability deteriorates.
Continued Loss Risk in Equipment Manufacturing & Sales: The Equipment Manufacturing & Sales Business recorded an operating loss of ¥1.0B; although the loss narrowed YoY, profitability has not returned. If demand recovery for semiconductor and FPD manufacturing equipment is slow, this segment could remain a drag on consolidated profitability. Future order trends and progress on profitability improvement measures will be key monitoring points.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.1% | 5.5% (3.5%–7.2%) | +5.6pt |
| Net Margin | 8.8% | 3.5% (2.5%–4.4%) | +5.3pt |
The company’s profitability substantially exceeds the industry median and sits at a top-tier level.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 14.0% | 9.8% (-2.1%–15.1%) | +4.2pt |
The company’s growth rate exceeds the industry median, maintaining a solid growth pace.
※ Source: Company aggregation
The core Equipment Construction Business showed notable improvement in project profitability, with the completed contract gross profit margin rising to 20.9% (YoY +3.5pt) and Operating margin to 11.1% (+3.2pt), substantially exceeding the industry median of 5.5% and establishing a high-profit profile. Improved project mix and strengthened cost control are the main drivers, and it appears likely that this improvement is structural rather than purely transitory. Key questions going forward are the sustainability of these margin levels and the company’s ability to pass through rising labor and material costs.
Cash generation quality is extremely high: OCF ¥127.3B is 1.38x Net Income ¥92.1B, OCF/EBITDA 1.03x, and accrual ratio -3.5%, indicating excellent cash realization of profits. FCF ¥72.6B covers dividends ¥37.4B by 1.94x, and together with Equity Ratio 50.5% and Cash & Deposits ¥263.9B, the capital allocation appears sustainable. Capital expenditures ¥38.4B are 5.4x depreciation ¥7.1B, reflecting proactive investment likely to improve future construction efficiency and value-add.
Segment concentration risk and the continued deficit in Equipment Manufacturing & Sales remain medium-term challenges. Equipment Construction accounts for 94.6% of Revenue, making performance sensitive to private and public project cycles and project-level profitability volatility. Equipment Manufacturing & Sales posted an operating loss of ¥1.0B, merely narrowing the deficit, so the timeline for returning to profitability and order trends are key watch points. SG&A growth of +20.4% exceeding Revenue growth of +14.0% also highlights medium- to long-term cost management challenges.
This report is an earnings analysis generated automatically by AI from XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your own responsibility; consult advisors as needed before making investment decisions.
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