| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue | ¥1150.2B | ¥1329.0B | -13.5% |
| Operating Income | ¥86.0B | ¥96.8B | -11.2% |
| Ordinary Income | ¥110.5B | ¥126.2B | -12.4% |
| Net Income | ¥36.0B | ¥26.0B | +38.4% |
| ROE | 3.6% | 2.8% | - |
For the fiscal year ended March 2026, Revenue was ¥1150.2B (¥-178.8B YoY, -13.5%), Operating Income was ¥86.0B (¥-10.8B YoY, -11.2%), Ordinary Income was ¥110.5B (¥-15.6B YoY, -12.4%), and Net Income attributable to owners of the parent was ¥36.0B (¥+10.0B YoY, +38.4%). Despite declines in top-line and operating profit, gross margin improved to 18.6% (YoY +2.2pt) and SG&A ratio was maintained at 11.1%, resulting in a slight increase in operating margin to 7.5% (YoY +0.2pt). A large revenue decline in the Steel Structure segment (-21.0%) weighed on consolidated results, but Operating Income increased modestly by +0.7% in that segment, preserving profitability, while the Solutions segment continued to deliver high returns with an operating margin of 37.8%. The large increase in Net Income was mainly driven by a reduction in corporate tax expense (prior year ¥31.2B → current year ¥24.6B), so Pre-tax Income declined to ¥113.0B (prior year ¥126.8B). Operating Cash Flow was ¥151.6B (YoY +54.1%), aided by collection of Completed Contract Accounts Receivable of ¥81.7B and an increase in Advances on Uncompleted Construction of ¥19.5B. Net assets strengthened to ¥995.1B (¥+79.4B YoY), and Equity Ratio improved to 61.1% (YoY +6.1pt), indicating enhanced financial soundness. Dividends were maintained at an annual ¥151 (interim ¥65 and year-end ¥86), with a Payout Ratio of 22.6%. Robust FCF of ¥133.3B adequately covered dividends and capital expenditure (¥25.4B).
[Revenue] Revenue of ¥1150.2B represented a significant decline of -13.5% YoY. The primary drivers were reduced sales in the Steel Structure segment (-21.0%, Revenue ¥498.8B) and the Civil Engineering segment (-14.8%, Revenue ¥329.2B), which together accounted for approximately ¥166B of revenue decline. The Steel Structure decline reflected a swing from large projects in the prior year and a cycle of new orders, while Civil Engineering was impacted by timing concentration of public infrastructure project completions. Conversely, the Building segment grew +7.9% (Revenue ¥167.0B) and the Solutions segment grew +3.1% (Revenue ¥82.0B), partially offsetting the overall decline along with Other segments (-2.5%, Revenue ¥95.5B). Cost of sales ratio improved to 81.4% (YoY -2.2pt), lifting gross margin to 18.6% (YoY +2.2pt) and partially absorbing the impact of lower Revenue.
[Profitability] Operating Income of ¥86.0B was down -11.2% YoY but declined less than top-line (-13.5%). Improvement in gross margin (+2.2pt) and stable SG&A ratio (11.1%) resulted in a modest increase in operating margin to 7.5% (YoY +0.2pt). By segment, Steel Structure recorded Operating Income of ¥63.2B (YoY +0.7%, margin 12.7%), securing higher profit despite lower sales through effective contract profitability management. Solutions delivered Operating Income of ¥31.0B (YoY +3.9%, margin 37.8%), sustaining high margins and underpinning consolidated profit. Civil Engineering and Building reported Operating Income of ¥16.5B (YoY -21.5%) and ¥13.1B (YoY -9.4%) respectively, with lingering pressure from higher raw material and labor costs. Non-operating income totaled ¥34.9B, led by equity-method investment income of ¥23.0B (down ¥7.5B from prior year ¥30.5B) and subsidy income of ¥6.0B; the decline in equity-method income pressured Ordinary Income. Ordinary Income of ¥110.5B (YoY -12.4%) declined more than Operating Income due to reduced non-operating income. Extraordinary items recorded a gain on sale of investment securities of ¥3.8B offset by impairment losses of ¥1.2B, for a net ¥2.4B (prior year ¥0.7B) small increase. Income taxes decreased to ¥24.6B (prior year ¥31.2B; effective tax rate 21.8%), and because the reduction in tax burden exceeded the decline in Pre-tax Income (Pre-tax Income ¥113.0B vs prior year ¥126.8B), Net Income attributable to owners rose to ¥36.0B (prior year ¥26.0B, +38.4%). Overall, the company experienced reduced revenue and income but with certain margin improvements.
The Steel Structure segment recorded Revenue ¥498.8B (YoY -21.0%) and Operating Income ¥63.2B (YoY +0.7%), improving operating margin substantially to 12.7% (prior year 10.1%, +2.6pt). Profitability was supported by securing margins on large projects and process efficiency, succeeding in maintaining profitability amid revenue decline. The Civil Engineering segment posted Revenue ¥329.2B (YoY -14.8%) and Operating Income ¥16.5B (YoY -21.5%), with operating margin sliding to 5.0% (prior year 5.5%, -0.5pt) due to contraction in public infrastructure projects and rising materials and labor costs. The Building segment grew Revenue to ¥167.0B (YoY +7.9%) but Operating Income decreased to ¥13.1B (YoY -9.4%), with margin 7.8% (prior year 9.4%, -1.6pt) as project profitability weakened. The Solutions segment achieved Revenue ¥82.0B (YoY +3.1%) and Operating Income ¥31.0B (YoY +3.9%), maintaining a high operating margin of 37.8% (prior year 37.5%, +0.3pt). Strong software development and next-generation robot sales continued, making Solutions the primary earnings source, accounting for 36.0% of consolidated Operating Income. Other segments reported Revenue ¥95.5B (YoY -2.5%) and an operating loss of ¥3.9B (widened from loss ¥1.5B prior year), with profitability deterioration in aviation and real estate businesses.
[Profitability] Operating margin 7.5%, Gross margin 18.6%, SG&A ratio 11.1%; Gross margin improved +2.2pt from 16.4% in the prior year. ROE 3.6% (down -5.2pt from 8.8% prior year) is Net Income ¥36.0B divided by Equity ¥995.1B; the large decline in absolute Net Income (prior year ¥88.2B → ¥36.0B) is the primary driver of the ROE drop. ROA (Ordinary Income basis) was 6.7% (prior year 7.7%, -1.0pt), with Total Asset Turnover 0.70x (Revenue ¥1,150.2B ÷ Total Assets ¥1,629.9B), low but within construction industry norms. [Cash Quality] Operating Cash Flow was ¥151.6B versus Net Income ¥36.0B, giving OCF/Net Income of 4.21x, indicating high cash quality. EBITDA was ¥117.2B (Operating Income ¥86.0B + Depreciation ¥31.2B), and Operating CF was 1.29x EBITDA, indicating strong cash conversion. [Investment Efficiency] Capital Expenditure ¥25.4B is 0.81x Depreciation ¥31.2B, focused on renewal investments; Total investment including intangible assets was ¥31.6B (intangible ¥6.2B), indicating controlled cash outflows. [Financial Soundness] Equity Ratio 61.1% (prior year 55.0%, +6.1pt), Current Ratio 170.1% (Current Assets ¥824.8B ÷ Current Liabilities ¥485.1B), Quick Ratio 169.8%, showing strong short-term liquidity. Interest-bearing debt totaled ¥103.8B (Short-term borrowings ¥15.0B + Long-term borrowings ¥88.8B + Bonds ¥27.0B), Debt/EBITDA was 0.89x, Net Debt (interest-bearing debt ¥103.8B - Cash ¥175.6B) was -¥71.8B (net cash position), and Interest Coverage was 22.0x (EBITDA ¥117.2B ÷ Interest expense 3.9B + Lease interest 0.4B), indicating very high interest-bearing capacity.
Operating CF rose to ¥151.6B (prior year ¥98.4B, +54.1%). Starting from Pre-tax Income ¥113.0B plus Depreciation ¥31.2B and subtracting equity-method income -¥23.0B, the subtotal for Operating CF was ¥175.4B. In working capital, collection of Completed Contract Accounts Receivable of ¥81.7B (changes in trade receivables) materially contributed cash inflow, and an increase in Advances on Uncompleted Construction of ¥19.5B added further inflow. Conversely, decrease in trade payables -¥28.9B and increase in inventories -¥1.0B were cash outflows. After payment of income taxes -¥31.2B, Operating CF totaled ¥151.6B, 4.21x Net Income ¥36.0B. Investing CF was -¥18.3B, driven by acquisition of tangible fixed assets -¥25.4B and intangible assets -¥6.2B, partly offset by sales of investment securities ¥4.8B. Free Cash Flow was ¥133.3B (Operating CF ¥151.6B + Investing CF -¥18.3B), ample to cover dividends ¥28.7B and capital expenditure. Financing CF was -¥101.3B, led by net decrease in short-term borrowings -¥48.5B, repayment of long-term borrowings -¥46.7B, and dividends paid -¥28.6B, resulting in reduction of interest-bearing debt. Cash and cash equivalents increased to ¥174.8B (prior year ¥142.8B, +¥32.0B), further strengthening liquidity.
Of Ordinary Income ¥110.5B, Operating Income ¥86.0B (77.8%) was derived from core operations. Non-operating income ¥34.9B includes equity-method investment income ¥23.0B (20.8% of Ordinary Income) and subsidies ¥6.0B. Equity-method income declined from ¥30.5B in the prior year by -¥7.5B, indicating increased exposure to earnings volatility at external investees. Extraordinary items were minor, with gain on sale of investment securities ¥3.8B and impairment losses ¥1.2B, netting +¥2.4B, but the sale gain is a one-off item. The difference between Ordinary Income and Pre-tax Income was small (¥2.5B), indicating limited impact from extraordinary items. Comprehensive Income was ¥106.1B, well above Net Income ¥36.0B; other comprehensive income ¥70.1B was mainly due to equity-method investees’ equity changes ¥6.3B, actuarial adjustments related to retirement benefits ¥8.3B, and valuation differences on securities ¥3.1B. The fact that Operating CF is 4.21x Net Income is largely attributable to collection of trade receivables and increases in advances, reflecting the timing mismatch between profit recognition and cash collection typical in construction. Allowance for construction loss provisions was increased to ¥38.1B (prior year ¥29.1B, +¥9.0B), showing a conservative provisioning posture against potential future deterioration in contract profitability. This modestly pressures earnings quality but is complemented by strong cash generation.
The full-year guidance is Revenue ¥1,250.0B (YoY +8.7%), Operating Income ¥72.0B (YoY -16.3%), Ordinary Income ¥95.0B (YoY -14.1%), and Net Income ¥71.0B (versus current period ¥36.0B, +97.2%). There were no revisions from the initial forecast; progress rates are Revenue 92.0%, Operating Income 119.4%, Ordinary Income 116.3%, indicating Operating and Ordinary Income have exceeded the plan year-to-date. However, Net Income of ¥36.0B represents only 50.7% of the full-year forecast ¥71.0B, implying guidance incorporates sizable profit recognition in the second half. The Revenue forecast +8.7% assumes backlog digestion in Steel Structure and Civil Engineering and continued growth in Building and Solutions, while the Operating Income forecast -16.3% reflects conservative assumptions incorporating raw material and labor cost increases and higher construction loss provisioning. The smaller decline in Ordinary Income versus Operating Income (-14.1% vs -16.3%) may imply an expected recovery in equity-method income. EPS forecast is ¥135.71 versus forecast dividend ¥21.00, implying expected Payout Ratio 15.5%, which is more conservative than the current period Payout Ratio 22.6%. Overall, the guidance reflects a cautious scenario that factors in order profitability management and volatility in equity-method income.
Annual dividend was interim ¥65 and year-end ¥86, totaling ¥151 (substantial increase from prior year ¥45), corresponding to a Payout Ratio of 22.6% (Total dividends ¥8.1B against Net Income ¥36.0B). Note that a 1-for-3 share split was implemented on April 1, 2026, and dividend amounts are presented on a pre-split actual payment basis. On a post-split basis, the per-share dividend is approximately ¥50 (¥151 ÷ 3). With FCF of ¥133.3B versus total dividends ¥28.7B, FCF coverage was 4.64x, indicating very high sustainability. Operating CF ¥151.6B also comfortably covers dividends, so maintaining dividends even under short-term performance volatility is feasible. Treasury stock acquisition was ¥0.04B, with disposals ¥2.2B (recording disposal gains), indicating a return policy centered on dividends. Total Return Ratio was limited to dividends at 22.6%, leaving ample room for future dividend increases or expanded share buybacks. Next fiscal year’s forecast dividend ¥21.00 (post-split basis) implies a Payout Ratio of 15.5% against forecast Net Income ¥71.0B, maintaining a conservative dividend policy.
Deterioration in project mix / Raw material & labor cost inflation risk: Construction loss provisions were materially increased to ¥38.1B (prior year ¥29.1B, +¥9.0B), and deterioration in profitability of booked projects is manifesting. Operating margins in Civil Engineering and Building are low at 5.0% and 7.8% respectively; if materials and labor cost increases cannot be passed through to prices, margins could be further compressed. Although Gross margin improved to 18.6%, it remains below industry median, and strict cost control remains a continuing challenge.
Order intake & schedule variability risk: The primary cause of the -13.5% YoY Revenue decline was timing concentration of large project completions in Steel Structure and Civil Engineering. The construction industry’s inherent timing mismatch between order intake and revenue recognition can cause significant quarter-to-quarter and full-year volatility. With Completed Contract Accounts Receivable of ¥573.3B (35.2% of Total Assets) and Advances on Uncompleted Construction of ¥93.6B, delays in project progress or client payment delays could affect working capital and cash flow. The next fiscal year guidance assumes conservative Operating Income (-16.3%) incorporating order profitability and schedule risk.
Equity-method investee performance volatility: Equity-method investment income of ¥23.0B (20.8% of Ordinary Income) declined from ¥30.5B prior year, and performance at external investees directly affects final profits. Investments in equity-method associates amount to ¥426.96B (26.2% of Total Assets), so deterioration in investee business conditions or impairment risks could materially impact Ordinary Income and Comprehensive Income. Recovery in equity-method income may be a key assumption underlying next year’s guidance, making exposure to external factors significant.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.5% | 7.8% (4.6%–12.3%) | -0.3pt |
| Net Margin | 3.1% | 5.2% (2.3%–8.2%) | -2.1pt |
Operating margin is broadly in line with the industry median, but Net Margin lags by -2.1pt, largely due to decreased equity-method income and tax effects.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -13.5% | 3.7% (-0.4%–9.3%) | -17.2pt |
Revenue growth markedly underperforms the industry median, reflecting a temporary downturn driven by a rebound from large projects in Steel Structure and Civil Engineering.
※ Source: Company aggregation
Despite a revenue downturn, the company achieved a gross margin improvement of +2.2pt and a slight increase in operating margin, supported by cost control and expansion of high-margin segments (Solutions with 37.8% margin). In Steel Structure, Operating Income increased +0.7% despite Revenue declining -21.0%, demonstrating effective price and schedule management. Next year’s guidance is conservative—Revenue recovery with lower Operating Income—yet improvements in order quality and cost stabilization could drive upside.
Operating CF of ¥151.6B (4.21x Net Income) is ample, driven by collection of Completed Contract Accounts Receivable ¥81.7B and an increase in Advances on Uncompleted Construction ¥19.5B. FCF ¥133.3B sufficiently covers dividends and capex, and deleveraging reduced interest-bearing debt to ¥103.8B (Debt/EBITDA 0.89x), resulting in Equity Ratio 61.1% and Interest Coverage 22.0x—indicating very strong financial health. Dividend sustainability is high even amid short-term volatility, and there is substantial room for future dividend increases or expanded buybacks.
Increases in construction loss provisions (+¥9.0B) and decline in equity-method income (-¥7.5B) pressure earnings quality, though robust Operating CF offsets this. Focus for the next fiscal year will be recovery of project profitability in Civil Engineering and Building, sustained growth in Solutions, and stabilization of equity-method income. Gross margin of 18.6% remains below the industry median; whether it can be restored to 20% will be a key inflection point for medium-term earnings power.
This report is an AI-generated financial analysis document created by analyzing XBRL financial statements. It is not a recommendation to invest in any specific security. Industry benchmarks are reference data aggregated by the company from public financial statements. Investment decisions should be made at your own responsibility and, where necessary, in consultation with a professional advisor.