| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥566.6B | ¥747.2B | -24.2% |
| Operating Income | ¥45.2B | ¥91.6B | -50.6% |
| Ordinary Income | ¥48.3B | ¥94.8B | -49.1% |
| Net Income | ¥34.7B | ¥66.1B | -47.6% |
| ROE | 6.9% | 13.6% | - |
For the fiscal year ended March 2026 (FY2026), Revenue was ¥566.6B (YoY -¥180.7B, -24.2%), Operating Income was ¥45.2B (YoY -¥46.4B, -50.6%), Ordinary Income was ¥48.3B (YoY -¥46.5B, -49.1%), and Net Income was ¥34.7B (YoY -¥31.4B, -47.6%), resulting in a substantial decline in both sales and profits. The revenue decline was mainly driven by a sharp slowdown at MMBRIDGE (-41.3%), while the core MIYAJIENGINEERING segment declined more moderately (-12.2%). The operating margin fell 427bp to 8.0% (prior year 12.3%), as MMBRIDGE’s profitability deteriorated (margin 3.5%, prior year 17.0%) and gross margin contracted (17.4%, prior year 19.0%), reversing operating leverage. Ordinary income margin also declined 417bp to 8.5% (prior year 12.7%). Net margin narrowed 271bp to 6.1% (prior year 8.8%), but tax relief (effective tax rate 30.2%, prior year 30.8%) and support from non-operating gains (dividend income ¥2.7B, gains on sale of investment securities ¥1.9B) moderated the decline in net profit.
[Revenue] Completed contract revenue was ¥566.6B, a significant YoY decrease of -24.2%. The primary cause was reduced orders and deferred progress at MMBRIDGE. By segment, core MIYAJIENGINEERING was relatively resilient at ¥394.2B (-12.2%), while MMBRIDGE fell sharply to ¥177.9B (-41.3%), weighing on consolidated results. Major customers included the Ministry of Land, Infrastructure, Transport and Tourism at ¥129.3B and West Nippon Expressway Company at ¥121.2B, indicating high dependency on public and quasi-public projects. Gross margin contracted 160bp to 17.4% (prior year 19.0%), suggesting deterioration in project profitability. An increase in provision for construction losses of ¥23.9B (prior year ¥20.2B) depressed gross profit.
[Profitability] SG&A was ¥53.3B, representing 9.4% of sales (prior year 6.7%), up 267bp. While revenue fell -24.2%, SG&A increased by +5.8%, revealing fixed-cost rigidity and contributing to Operating Income of ¥45.2B (-50.6%), a profit decline that exceeded the revenue drop. Operating margin decreased 427bp to 8.0% (prior year 12.3%). Non-operating items included dividend income ¥2.7B and gains on sale of investment securities ¥1.9B, supporting Ordinary Income of ¥48.3B (-49.1%) and an ordinary margin of 8.5% (down 417bp). Extraordinary items were net +¥1.4B and immaterial. Profit before tax was ¥49.7B; after income taxes of ¥15.0B (effective tax rate 30.2%) and non-controlling interests of ¥2.0B, Net Income attributable to owners of the parent was ¥34.7B (-47.6%). In conclusion, reduced revenue and reversed operating leverage caused profit declines to exceed revenue declines.
MIYAJIENGINEERING: Revenue ¥394.2B (-12.2%), Operating Income ¥39.8B (-0.6%), Operating Margin 10.1%. This core segment, engaged in new construction and repair of bridges and steel structures, maintained near-flat operating profit despite revenue decline and showed relative stability in profitability management, accounting for about 88% of consolidated operating income.
MMBRIDGE: Revenue ¥177.9B (-41.3%), Operating Income ¥6.3B (-87.8%), Operating Margin 3.5% (prior year 17.0%). Engaged in design, fabrication, and erection of bridges and coastal structures, this segment experienced large profit declines due to weakened demand and deteriorating project profitability. A 13.5pt drop in operating margin was the main driver of the consolidated margin contraction.
Other (Holding company, etc.): Revenue ¥35.4B (-28.0%), Operating Income ¥29.7B (-34.9%). The operating margin of 83.7% reflects a special composition including intra-group management revenue and dividend income. Recovery of consolidated earning power requires normalization of MMBRIDGE’s profitability.
[Profitability] Operating margin 8.0% (prior year 12.3%), Net margin 6.1% (prior year 8.8%) indicate margin compression. ROE 6.9% (prior year est. 12.1%) declined significantly and can be decomposed into Net Margin 5.8% × Total Asset Turnover 0.691 (prior year est. 0.825) × Financial Leverage 1.64x (prior year 1.87x). The largest deterioration drivers were margin compression at the operating level and lower turnover. Estimated ROIC 4.2% (EBIT ¥45.3B ÷ Invested Capital est. ¥1,077B) indicates reduced capital efficiency.
[Cash Quality] Operating Cash Flow / Net Income 3.35x, OCF / EBITDA 1.78x—both very high—driven by working capital release: trade receivables down ¥87.0B and advances received up ¥20.4B. Accrual ratio -9.4% indicates no divergence between accounting profit and cash flow; earnings quality is good.
[Investment Efficiency] CapEx / Depreciation 2.62x shows a growth investment posture, but recovery under a revenue-declining environment warrants caution. Capital expenditures were ¥42.7B (prior year ¥24.9B), exceeding depreciation of ¥16.3B.
[Financial Soundness] Equity Ratio 60.9% (prior year 53.6%), current ratio 197%, quick ratio 197% indicate ample liquidity. Net interest-bearing debt ¥78.0B (prior year -¥82.0B) turned net debt positive, but Debt/EBITDA 1.27x and Interest Coverage 92x show strong repayment capacity. Cash and deposits were ¥123.7B, maintaining Cash / Short-term Debt 1.65x. Short-term debt ratio 96% implies structural refinancing risk; however, given advances received of ¥130.8B, near-term liquidity is acceptable.
Operating Cash Flow was ¥109.4B (prior year -¥26.5B), a large swing to positive. Components included profit before tax ¥49.7B, depreciation ¥16.3B, decrease in trade receivables ¥87.0B, increase in advances received ¥20.4B, decrease in accounts payable -¥38.6B, and increase in provision for construction losses ¥3.6B, with working capital release the main driver. From subtotal ¥129.8B, income tax paid -¥23.1B was deducted, resulting in OCF of ¥109.4B. Investing Cash Flow was -¥41.0B, mainly capital expenditures -¥42.7B (aggressive) partially offset by sale of securities +¥2.3B. FCF was ¥68.5B, providing funds for dividends and debt repayments. Financing Cash Flow was -¥109.8B, driven by repayment of short-term borrowings -¥75.0B, dividends -¥25.9B, dividends to non-controlling interests -¥8.7B, and lease liability repayments -¥0.4B. Cash decreased by ¥41.3B to ¥123.7B at year-end. Operating Cash Flow / Net Income 3.35x and FCF coverage 2.54x indicate very strong cash generation, but since working capital release was a major contributor, attention is required for potential reversals next fiscal year.
Recurring income forms the core of profits; one-time items were Special Gains ¥1.9B (gain on sale of investment securities) and Special Losses ¥0.5B (loss on disposal of fixed assets), net +¥1.4B, about 4% of Net Income. Non-operating income ¥3.8B (dividend income ¥2.7B, others ¥0.2B) is limited to 0.7% of sales, indicating low reliance on non-core activities. OCF ¥109.4B is 3.35x Net Income ¥34.7B, and accrual ratio -9.4% reflects good accrual quality. The gap between Ordinary Income ¥48.3B and Net Income ¥34.7B (-28%) is primarily explained by income taxes ¥15.0B (effective tax rate 30.2%) and non-controlling interests ¥2.0B, and no structural concerns over earnings quality are identified. Comprehensive income was ¥48.7B; the difference +¥14.0B versus Net Income ¥34.7B arose from valuation differences on available-for-sale securities ¥13.6B and actuarial gains/losses on retirement benefits ¥0.4B, reflecting mark-to-market adjustments of financial assets recognized in OCI and equity.
Versus the full-year forecast (Revenue ¥550.0B, Operating Income ¥23.0B, Ordinary Income ¥24.0B, EPS ¥75.42, Dividend ¥27.00), actuals exceeded guidance: Revenue ¥566.6B (achievement 103%), Operating Income ¥45.2B (197%), Ordinary Income ¥48.3B (201%), EPS ¥123.09 (163%), indicating a significant upside. The upside is suggested to come from accelerated project progress and contributions from higher-margin projects, though it also implies the forecast was conservative. Since actuals have already surpassed the full-year forecast, there may be skewed progress allocation, or additional orders and accelerated progress after the forecast announcement. Attention should be paid to potential progress reversals and project mix variability in subsequent fiscal years.
Annual dividend: due to a 1-for-2 stock split during the fiscal year (1 share → 2 shares), the dividends were Q2 interim ¥42.5 (pre-split) + year-end ¥55.0 (post-split) = annual ¥97.5 (after split adjustment). Against EPS ¥123.09, the payout ratio is 79.2%, a high level. Total dividends of ¥25.9B versus Net Income attributable to owners of the parent ¥34.7B implies a payout ratio of 74.6%. With OCF ¥109.4B and FCF ¥68.5B, cash generation supports high distributions; Cash Dividend Coverage is 1.19x (OCF ÷ dividends) and FCF Coverage is 2.64x, indicating high safety. However, given the business’ earnings volatility and CapEx / Depreciation 2.62x, medium-term dividend sustainability depends on continued earnings and cash generation. The dividend policy emphasizes stable dividend intent and mentions DOE levels, but there is room for agile adjustment linked to performance in subsequent years. No share buybacks were executed; total shareholder returns consist solely of dividends.
Continued profitability deterioration at MMBRIDGE: MMBRIDGE’s operating margin is 3.5% (prior year 17.0%), a decline of 1,351bp, and Operating Income fell -87.8%. This is the main driver of consolidated margin contraction; if order conditions and project profitability at this segment do not improve, recovery of consolidated earning power will be significantly delayed. The increased provision for construction losses of ¥23.9B suggests remaining profitability stress.
Refinancing risk due to concentration of short-term interest-bearing debt: Of total interest-bearing debt ¥78.0B, short-term borrowings account for ¥75.0B (96%), concentrating maturities in the short term. While Cash / Short-term Debt 1.65x and Interest Coverage 92x indicate solid near-term liquidity, there is refinancing risk in environments of rising rates or deteriorating credit conditions. Progression toward conversion to long-term borrowings is desirable.
Revenue volatility from order and progress fluctuations: Revenue down -24.2%, increased provision for construction losses, and significant working capital release (trade receivables +¥87.0B, advances received +¥20.4B) suggest timing concentration of orders and project progress. Depending on backlog and progress rates next fiscal year, earnings and cash flow may swing materially. Reliance on public investment cycles and intensified bidding competition are downside risks.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.0% | 7.8% (4.6%–12.3%) | +0.2pt |
| Net Margin | 6.1% | 5.2% (2.3%–8.2%) | +0.9pt |
Profitability exceeds the industry median, and margin levels remain in the upper range.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -24.2% | 3.7% (-0.4%–9.3%) | -27.9pt |
Revenue growth is substantially below the industry median, highlighting a deterioration in the order environment.
※Source: Company compilation
Even in a -24.2% revenue decline, the company maintained operating margin 8.0% (median +0.2pt) and net margin 6.1% (median +0.9pt), demonstrating relatively strong profit-generating capacity. However, MMBRIDGE’s operating margin deterioration to 3.5% (prior year 17.0%) and profit deterioration outside the core segment are pressuring consolidated margins; normalization of that segment’s profitability is key to a recovery in earning power. Monitoring backlog, project mix quality, and progress on price pass-through are important.
OCF ¥109.4B (3.35x Net Income) and FCF ¥68.5B indicate exceptionally strong cash generation, supporting a high dividend payout ratio of 79.2%. Although short-term interest-bearing debt comprises 96% and creates refinancing dependence, Debt/EBITDA 1.27x, Interest Coverage 92x, and Cash / Short-term Debt 1.65x suggest sufficient financial resilience. Still, since working capital release (trade receivables +¥87.0B, advances received +¥20.4B) was the main driver of OCF, attention should be paid to potential reversals and the sustainability of operating cash flow.
While CapEx / Depreciation 2.62x indicates continued growth investment, recovering the ¥42.7B in capital expenditures in a revenue-declining environment depends on order and sales recovery. The significant upside versus full-year guidance (Revenue +3%, Operating Income +97%) suggests conservative guidance and accelerated progress; validation of sustainability is required in subsequent fiscal years. Disclosure of order intake, backlog, and trends in project-level profitability will be pivotal in evaluating the results.
This report is an earnings analysis document automatically generated by AI based on 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 based on public financial statements. Investment decisions should be made at your own responsibility; consult a professional advisor if necessary.