| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥940.8B | ¥897.9B | +4.8% |
| Operating Income / Operating Profit | ¥106.7B | ¥74.6B | +43.1% |
| Ordinary Income | ¥114.7B | ¥81.4B | +40.9% |
| Net Income / Net Profit | ¥83.4B | ¥58.1B | +43.7% |
| ROE | 10.3% | 8.1% | - |
FY2026 results ended with Revenue ¥940.8B (vs prior year +¥42.9B +4.8%), Operating Income ¥106.7B (vs prior year +¥32.1B +43.1%), Ordinary Income ¥114.7B (vs prior year +¥33.3B +40.9%), and Net Income ¥83.4B (vs prior year +¥25.3B +43.7%), achieving revenue and profit growth. Operating margin improved to 11.3% (prior year 8.3%), up approximately +3.0pt, and gross profit margin expanded to 22.4% (prior year 19.2%), up approximately +3.2pt. The core Equipment Construction Business (sales mix 91.7%) saw significant project-level margin improvement, raising its operating margin to 11.7% (prior year 8.4%), and segment profit reached ¥101.1B (+50.7%), accounting for 94.8% of consolidated operating income. SG&A ratio was contained at 11.0%, up only +0.1pt YoY, so gross margin improvements flowed through to expanded operating margins. Operating Cash Flow (OCF) was ¥116.5B (turning from prior year -¥6.2B to positive), 1.4x Net Income; increases in advances received on uncompleted construction (+¥27.2B) and collection of accounts receivable (+¥38.1B) led cash inflows, resulting in abundant Free Cash Flow (FCF) of ¥130.4B. Total assets were ¥1,109.3B (vs prior year +¥110.2B), Net Assets were ¥806.7B (vs prior year +¥89.9B) producing an Equity Ratio of 72.7%. Cash and deposits ¥273.9B plus investment securities ¥272.5B total ¥546.4B, highlighting accumulation of financial assets. Dividends were ¥150 per share annually with a Payout Ratio of 35.5%; additionally, ¥22.4B of share buybacks were executed yielding a Total Return Ratio of 51.2%. Shareholder returns are sustainable within FCF. FY2027 guidance forecasts Revenue ¥1,050.0B (+11.6%) and Operating Income ¥110.0B (+3.1%) — revenue growth with roughly flat profits under conservative assumptions.
[Revenue] Revenue increased to ¥940.8B (+4.8%), mainly driven by expansion in the Equipment Construction Business. By segment, Equipment Construction was ¥862.9B (+7.4%), accounting for 91.7% of total, led by increased project progress and handovers. Equipment Sales was ¥96.9B (-17.2%) and Equipment Manufacturing was ¥29.4B (-2.5%), both declining and constraining consolidated growth. In the construction business, contracts recognized over time amounted to ¥778.4B, about 80% of the total, contributing to stability in project composition. Although no regional or customer breakdown is disclosed, progress on large projects for major domestic clients appears to be the main driver.
[Profitability] Operating Income rose sharply to ¥106.7B (+43.1%), with operating margin improving to 11.3% (+3.0pt). Gross profit was ¥210.6B (gross margin 22.4%), up ¥38.3B YoY, driven by improved project-level profitability in Equipment Construction and optimization of material and subcontracting costs. SG&A was ¥103.9B (SG&A ratio 11.0%), up ¥5.8B YoY, but was relatively contained versus revenue growth, leaving SG&A ratio up only +0.1pt. By segment, Equipment Construction generated Operating Income of ¥101.1B (margin 11.7%, prior year 8.4%), contributing 94.8% of consolidated profit; margin improvement in this segment led consolidated profit growth. Equipment Sales saw Operating Income ¥4.2B (-32.5%), margin 4.3% (prior year 6.4%), indicating margin deterioration. Equipment Manufacturing posted Operating Income ¥1.3B (+10.3%), margin 4.3%, still low in absolute terms. Ordinary Income was ¥114.7B (+40.9%), supported by non-operating income ¥8.2B (dividends received ¥4.3B, interest income ¥1.2B) with minimal non-operating expenses ¥0.2B. Extraordinary gains included ¥4.1B gain on sale of investment securities, but one-off items were limited relative to Pre-tax Income ¥118.8B. Income taxes were ¥31.4B (effective tax rate 26.4%) — standard — and Net Income was ¥83.4B (+43.7%), reflecting operating profit growth to the bottom line; Net Margin improved to 8.9% (prior year 6.5%), +2.4pt. In conclusion, revenue and profit growth were driven primarily by margin improvement in the Equipment Construction Business, while non-operating income from financial assets enhanced profit stability.
The Equipment Construction Business recorded Revenue ¥862.9B (+7.4%) and Operating Income ¥101.1B (+50.7%), with margin 11.7% (prior year 8.4%, +3.3pt), a significant improvement. Optimization of project mix and strict cost management expanded gross margin; this core segment accounts for 94.8% of consolidated operating income. Equipment Sales recorded Revenue ¥96.9B (-17.2%) and Operating Income ¥4.2B (-32.5%), margin 4.3% (prior year 6.4%, -2.1pt), reflecting deteriorating profitability likely due to external market conditions and competitive pressure. Equipment Manufacturing had Revenue ¥29.4B (-2.5%) and Operating Income ¥1.3B (+10.3%), margin 4.3% (prior year 3.8%, +0.5pt), showing slight improvement but limited scale and contribution. High dependence on Equipment Construction means maintaining margins in that segment is the most important issue for consolidated performance.
[Profitability] Operating margin was 11.3% (up from 8.3% prior year, +3.0pt), Net Margin was 8.9% (up from 6.5%, +2.4pt), both significantly above historical levels. ROE was 10.3% (up from 8.5% prior year), and ROA (based on Ordinary Income) was 10.9%, high. Expansion of gross margin to 22.4% (prior year 19.2%) led margin improvement, while containment of SG&A ratio at 11.0% contributed as well. [Cash Quality] Operating Cash Flow (OCF) ¥116.5B is 1.4x Net Income ¥83.4B, indicating strong cash conversion. OCF subtotal (before working capital changes) was ¥141.5B; adding Depreciation ¥2.2B yields an EBITDA approximation around ¥109B, and OCF/EBITDA ratio is 1.07x — high quality. Accrual ratio is -2.7% (working capital increase -¥2.3B / Total assets ¥1,109.3B), negative, indicating high earnings quality. [Investment Efficiency] Capital expenditure ¥1.2B / Depreciation ¥2.2B = 0.55x, indicating restrained investment; intangible investment was also small at ¥1.4B. Total asset turnover improved to 0.85x (Revenue ¥940.8B / average total assets during period ¥1,105.2B). [Financial Soundness] Equity Ratio was 72.7% (up +1.0pt from 71.7% prior year). Current ratio was 290.9% (Current assets ¥770.6B / Current liabilities ¥264.9B), very high, showing no short-term liquidity concerns. Reliance on interest-bearing debt is low; cash and deposits ¥273.9B plus securities ¥346.3B (current ¥69.8B + investment securities ¥272.5B) total ¥620.2B, indicating substantial financial assets.
OCF was ¥116.5B, turning positive from prior year -¥6.2B, and was 1.4x Net Income ¥83.4B, indicating strong cash generation. OCF subtotal was ¥141.5B, with decreases in trade receivables ¥38.1B (progress in collection of completed construction receivables) and increases in advances received on uncompleted construction ¥27.2B (higher advance payments) driving cash inflows. Conversely, reduction in accounts payable ¥45.7B (shortening of payment terms or one-off concentrated payments) was a cash outflow factor, but after paying corporate taxes ¥30.6B, OCF remained ample. Investing Cash Flow was a net inflow of ¥14.0B, driven by redemption/sale of securities: gain on sale of investment securities ¥5.4B and redemption of short-term investments ¥59.9B, offset by new investments (short-term ¥49.8B + investment securities ¥0.2B). Capital expenditure ¥1.2B and intangible investment ¥1.4B were small, indicating restrained growth investment. Free Cash Flow (FCF) was OCF ¥116.5B + Investing CF ¥14.0B = ¥130.4B, very ample. Financing Cash Flow was -¥44.4B, mainly due to dividend payments ¥21.9B and share buybacks ¥22.4B totaling ¥44.3B, executed within FCF. Cash and cash equivalents at period end were ¥313.9B (up from ¥227.8B at period start, +¥86.1B), indicating robust liquidity. Working capital swings reflect construction-industry-specific project progress and payment cycles; advances received on uncompleted construction at period end were ¥31.5B (prior year ¥4.3B, +627.9%), representing advance payments expected to be recognized as revenue as projects progress and strengthening the cash position.
Of Ordinary Income ¥114.7B, Operating Income ¥106.7B accounts for 93%, indicating earnings are highly core-driven. Non-operating income ¥8.2B comprises dividends received ¥4.3B and interest income ¥1.2B, providing stable income from financial assets with limited sustainability concerns. Extraordinary gains were limited to ¥4.1B gain on sale of investment securities, representing 3.5% of Pre-tax Income ¥118.8B, so one-off factors are limited and earnings quality is sound. Non-operating expenses were minimal at ¥0.2B, indicating almost no interest burden. Comprehensive income was ¥132.3B, exceeding Net Income ¥83.4B by ¥48.9B, mainly due to valuation gains on investment securities ¥47.4B (increase in unrealized gains). The gap between comprehensive income and net income is driven by asset price movements and is temporary, but it also strengthens equity and the stability of dividend capacity. Accrual ratio -2.7% is negative, meaning recognition of profit aligns with cash generation, reducing concerns of accounting manipulation. From Depreciation ¥2.2B and OCF subtotal ¥141.5B, an EBITDA approximation is ~¥109B and OCF/EBITDA ratio is 1.07x, indicating excellent cash conversion. Days sales outstanding (DSO) for receivables is 154 days (completed construction receivables ¥392.9B / daily sales ¥2.55B), and days payable outstanding (DPO) is 56 days (construction payables ¥112.7B / daily cost of sales ¥1.98B), reflecting a typical construction-industry working capital structure.
FY2027 full-year guidance: Revenue ¥1,050.0B (+11.6%), Operating Income ¥110.0B (+3.1%), Ordinary Income ¥118.0B (+2.9%), Net Income ¥84.0B (+0.7%). Compared with first-half results Revenue ¥940.8B and Operating Income ¥106.7B, the full year anticipates second-half incremental Revenue +¥109.2B and Operating Income +¥3.3B, reflecting a conservative plan. Progress rates are 89.6% for Revenue and 97.0% for Operating Income, indicating first-half concentration and an assumption of flat margins in the second half despite revenue growth. Full-year operating margin is forecast at 10.5%, down -0.8pt from current-year 11.3%, incorporating cost inflation and SG&A increases. EPS forecast is ¥202.00 vs current EPS ¥200.27, nearly flat. Dividend forecast is ¥55 (equivalent to ¥110 pre-share-split), continuing increased shareholder returns. Revenue growth outlook +11.6% assumes digestion of backlog in Equipment Construction and acquisition of new projects; the smaller profit growth +3.1% suggests conservative estimates on project mix. Achieving guidance depends on maintaining Equipment Construction margins, avoiding losses in Sales/Manufacturing segments, and efficient working capital management. Given first-half outperformance, there remains upside potential for full-year upgrades.
Annual dividend is ¥150 per share (interim ¥50, year-end ¥100), a substantial YoY increase of +¥106. Payout Ratio is 35.5% (total dividends ¥21.9B / Net Income ¥83.4B), the same level as prior year, indicating a consistent dividend policy. In addition, ¥22.4B of share buybacks were executed, resulting in a Total Return Ratio of 51.2% ((dividends ¥21.9B + buybacks ¥22.4B) / Net Income ¥83.4B). With FCF ¥130.4B and total shareholder returns ¥44.3B, FCF coverage is 2.94x, showing ample room and high sustainability for dividends and buybacks. FY2027 forecast dividend is ¥55 post-share-split (¥110 pre-split), which appears as a cut YoY on a per-share basis but the company conducted a 1-for-2 share split effective April 1, 2026 (1 share → 2 shares), so in substance dividend policy maintains an increase (pre-split comparable ¥220, +¥70). A commemorative dividend of ¥10 is also included, reflecting an aggressive shareholder return stance. Considering cash deposits ¥273.9B and unrealized gains on investment securities, dividend capacity is well secured and downside risk to dividends is low. The company indicates a policy aiming for Payout Ratio below 50%, seeking to balance profit growth and dividend growth.
Project profitability volatility: Provision for construction loss ¥1.0B (prior year ¥0.7B, +42.5%) and provision for uncompleted construction loss ¥1.0B have been recorded; deterioration in profitability of large projects or additional cost occurrences could pressure margins. While Equipment Construction margin 11.7% is well above historical levels, continued rises in material/subcontract costs or labor cost inflation could reverse cost ratios and reduce operating margins.
Business portfolio concentration risk: Equipment Construction accounts for 91.7% of Revenue and 94.8% of Operating Income, creating high dependence. Deterioration in order environment or intensified competition in this segment could cause significant consolidated performance swings. Equipment Sales already shows weakness (Revenue -17.2%, Operating Income -32.5%), indicating delayed business diversification and embedded vulnerability in the revenue base.
Insufficient growth investment risk: CapEx ¥1.2B / Depreciation ¥2.2B = 0.55x indicates continued restrained investment; insufficient investment in construction efficiency (BIM adoption, digitalization) or new areas could lead to long-term competitiveness decline and market share loss. Holding ¥620.2B in cash while not allocating to growth investment raises concerns on capital efficiency.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.3% | 5.5% (3.5%–7.2%) | +5.8pt |
| Net Margin | 8.9% | 3.5% (2.5%–4.4%) | +5.4pt |
The company outperforms the industry median by more than +5pt on both operating and net margins, ranking highly on profitability within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.8% | 9.8% (-2.1%–15.1%) | -5.1pt |
Revenue growth trails the industry median by -5.1pt, placing the company mid-to-lower in growth pace within the sector.
※Source: Company compilation
The biggest highlight is margin improvement in the Equipment Construction Business, lifting operating margin to 11.3% (+3.0pt) and ROE to 10.3%. OCF/Net Income 1.4x and FCF ¥130.4B indicate strong cash generation and high earnings quality. Conversely, next-year guidance is conservative — Revenue +11.6% vs Operating Income +3.1% — leaving upside potential given margin assumptions. Order intake and project mix trends will be the next key inflection points.
With a Payout Ratio of 35.5% and ¥22.4B share buybacks, Total Return Ratio is 51.2% and FCF coverage is 2.94x, making shareholder returns sustainable. FY2027 forecast dividend ¥55 post-split (¥220 pre-split) represents continued effective dividend increase and includes a ¥10 commemorative dividend, demonstrating proactive shareholder returns. While financial assets ¥620.2B secure dividend capacity, the low CapEx/Depreciation ratio 0.55x and continued investment restraint warrant attention from a medium-term competitiveness perspective. Elevating CapEx and allocating capital to digitalization will be key to sustaining profitability and growth.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. 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 are your responsibility; please consult a professional advisor as necessary before making any investment decision.