| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥11248.8B | ¥8475.5B | +32.7% |
| Operating Income / Operating Profit | ¥758.0B | ¥471.5B | +60.8% |
| Profit Before Tax | ¥1072.5B | ¥497.6B | +115.5% |
| Net Income / Net Profit | ¥781.9B | ¥328.4B | +138.1% |
| ROE | 12.1% | 6.1% | - |
For the fiscal year ended March 2026, Revenue / Net Sales were ¥11,248.8B (YoY +¥2,773.3B +32.7%), Operating Income was ¥758.0B (YoY +¥286.5B +60.8%), Ordinary Income was ¥989.1B (YoY +¥465.4B +88.9%), and Net Income Attributable to Owners of Parent was ¥765.7B (YoY +¥441.6B +136.2%), achieving substantial revenue and profit growth. Because three-period data are insufficient, Revenue is evaluated on a single-year basis; Operating Margin was 6.7% (YoY +1.2pt) and Net Margin was 7.0% (YoY +3.4pt), confirming structural improvement in profitability. The Civil Engineering Business expanded rapidly with Revenue +81.0% and recorded Operating Income ¥2,606.0B, and the Building Business also led performance with Revenue +36.9% and Operating Income ¥2,216.0B. An increase in financial income of ¥396.8B and gain on sale of affiliated company equity of ¥149.1B boosted Profit Before Tax, while impairment losses of ¥74.3B partially offset these gains. Operating Cash Flow (OCF) was ¥1,927.8B (YoY +386.8%), about 2.5x Net Income, and Free Cash Flow was ¥1,535.2B, substantially exceeding dividends of ¥177.4B, enabling both sound finances and shareholder returns.
[Revenue] Revenue was ¥11,248.8B, up +32.7% YoY, a substantial increase. By segment, the Building Business contributed ¥4,977.3B (+36.9%), Civil Engineering Business ¥2,649.5B (+81.0%), Paving Business ¥2,822.4B (+7.3%), and Infrastructure Operations Business ¥374.2B (+21.6%). Machinery Business was ¥395.0B (-3.7%), a slight decline. The Building Business benefited from demand for multi-family housing and logistics facilities and synergies from the integration with Sumitomo Mitsui Construction; the Civil Engineering Business was driven by accelerated progress on large bridge and tunnel projects; the Paving Business was supported by stable asphalt mix market conditions and continued public works. The Infrastructure Operations Business saw revenue growth from expanded renewable energy operations and commencement of public concession project operations. Gross Profit was ¥1,639.7B (prior year ¥1,155.1B) with a Gross Margin of 14.6% (prior year 13.6%), an improvement of +1.0pt, confirming successful price pass-through and optimization of work-type mix.
[Profit & Loss] Operating Income was ¥758.0B (prior year ¥471.5B, +60.8%) with an Operating Margin of 6.7% (prior year 5.6%, +1.2pt). Selling, General & Administrative Expenses were ¥941.6B with an SG&A ratio of 8.4% (prior year 8.1%, +0.3pt), but the Gross Margin improvement more than offset this, delivering operating leverage. Equity-method investment income (loss) shifted to -¥5.8B (prior year +¥13.6B), yet a gain on sale of affiliated company investments of ¥149.1B lifted Business Profit to ¥841.3B (prior year ¥485.4B). Other income totaled ¥22.2B against Other expenses of ¥105.5B (including impairment losses of ¥74.3B), resulting in Operating Income of ¥758.0B. Financial income rose sharply to ¥396.8B (prior year ¥105.0B), contributed by dividend income ¥29.7B, interest income ¥24.3B, and valuation gains. Financial costs edged up to ¥82.4B (prior year ¥78.9B), and Ordinary Income was ¥989.1B (prior year ¥497.7B, +88.9%). Income taxes were ¥290.5B (prior year ¥169.1B), a tax burden ratio of 27.1%. Net Income Attributable to Owners of Parent was ¥765.7B (prior year ¥324.2B, +136.2%), with a Net Margin of 7.0% (prior year 3.8%, +3.2pt). In conclusion, this was a strong results period of higher revenue and profits.
The Building Business recorded Revenue ¥4,977.3B (+36.9%) and Business Profit ¥221.6B (prior year ¥142.2B), with a Business Profit Margin of 4.4% (prior year 3.9%, +0.5pt). Growth in orders for multi-family housing and factories/logistics facilities and scale expansion from the Sumitomo Mitsui Construction integration contributed. The Civil Engineering Business had Revenue ¥2,649.5B (+81.0%) and Business Profit ¥260.6B (prior year ¥157.9B), with a Business Profit Margin of 9.8% (prior year 10.8%, -1.0pt); despite the margin decline, absolute profit increased significantly driven by progress on large bridge and tunnel projects. The Paving Business posted Revenue ¥2,822.4B (+7.3%) and Business Profit ¥213.8B (prior year ¥199.1B), maintaining a Business Profit Margin of 7.6% (prior year 7.6%). The Machinery Business had Revenue ¥395.0B (-3.7%) and Business Profit ¥19.3B (prior year ¥22.8B), with a Business Profit Margin of 4.9% (prior year 5.5%, -0.6pt), affected by a temporary adjustment in the construction machinery rental market. The Infrastructure Operations Business posted Revenue ¥374.2B (+21.6%) and Business Loss -¥17.5B (prior year -¥22.0B), narrowing the deficit, though initial investment burdens for renewable energy and concession projects continue. Other segments had Revenue ¥30.4B and Business Profit ¥154.6B (prior year ¥18.5B), driven by the gain on sale of affiliated company investments of ¥149.1B.
[Profitability] ROE of 13.6% improved from 7.1% in the prior year (+6.5pt), outperforming the industry median of 7.0% by +6.6pt. Operating Margin of 6.7% improved from 5.6% (+1.2pt) and exceeds the industry median 5.5% by +1.2pt. Net Margin of 7.0% improved from 3.8% (+3.2pt) and exceeds the industry median 3.5% by +3.4pt. The balance of Gross Margin 14.6% (prior year 13.6%, +1.0pt) and SG&A ratio 8.4% (prior year 8.1%, +0.3pt) is healthy; SG&A increase was absorbed by Gross Margin improvement, realizing operating leverage. Financial income represents 3.5% of Revenue and was a contributor to non-operating profit. [Cash Quality] OCF of ¥1,927.8B is 2.5x Net Income ¥781.9B, and the accrual ratio is -5.7%, indicating very sound cash backing of profits. OCF/EBITDA ratio is approximately 6.2x (EBITDA = Operating Income ¥758.0B + Depreciation & Amortization ¥446.1B ≒ ¥1,204.1B), high, aided by net inflows from working capital (receivables collection + increase in contract liabilities). DSO (days sales outstanding) is about 73 days, standard for construction, but attention is needed on collection lead times for progress-billed contract assets which increased by ¥3,721.9B. [Investment Efficiency] Capital expenditures of ¥527.9B exceed Depreciation & Amortization of ¥446.1B, indicating a growth investment stance. Goodwill of ¥1,762.8B represents 27.3% of Net Assets ¥6,452.3B, and the Goodwill/EBITDA multiple is about 5.7x, within an acceptable range, but monitoring impairment risk from ongoing M&A is important. [Financial Soundness] Equity Ratio is 30.2%, down from 37.4% a year ago, but within industry median range. D/E ratio is 2.14x (interest-bearing debt ¥5,733.0B / Net Assets ¥6,452.3B; calculating on parent company equity of ¥6,106.0B gives about 0.94x) and somewhat elevated, but Interest Coverage is about 9.2x (EBIT ¥758.0B / Financial Costs ¥82.4B), indicating strong ability to service interest. Current Ratio is 140% (Current Assets ¥1,365.4B / Current Liabilities ¥7,389.7B), indicating sound short-term liquidity; Cash ¥3,609.8B covers about 49% of current liabilities.
OCF was ¥1,927.8B (prior year ¥396.0B, +386.8%), a large increase, and cash conversion of Profit Before Tax ¥1,072.5B was 179.8%, very high. Subtotal OCF before working capital changes was ¥2,245.8B, with decreases in trade receivables ¥574.4B, increases in trade payables ¥237.9B, and increases in contract liabilities ¥80.5B generating cash, while an increase in contract assets -¥159.7B consumed cash. After payments of income taxes ¥293.1B, interest payments ¥78.8B, and lease payments ¥149.0B, OCF remained ample. Investing Cash Flow was -¥392.6B, with major outflows for capital expenditures -¥527.9B (tangible & intangible total), subsidiary acquisitions -¥346.8B, and acquisition of public facility operating rights -¥44.2B. Proceeds from sale of affiliated company equity ¥281.8B and proceeds from sale of other financial assets ¥260.7B partially offset investment outflows. Free Cash Flow was ¥1,535.2B (OCF ¥1,927.8B - Investing CF ¥392.6B), a significant improvement from ¥121.0B in the prior year. Financing Cash Flow had an inflow of ¥866.8B: despite net repayment of short-term borrowings -¥833.5B, repayment of long-term borrowings -¥296.7B, and bond redemptions -¥150.0B, the company raised long-term borrowings ¥795.1B, short-term borrowings ¥948.5B, and other financial liability proceeds ¥686.8B. After dividends paid ¥177.4B, Cash and Cash Equivalents increased by ¥2,414.8B to ¥3,609.8B (prior year ¥1,195.0B). The structure where OCF substantially exceeds Net Income is supported by increases in contract liabilities and progress in receivables collection, indicating strong cash generation capability.
Core earnings are driven by the Construction Business's Business Profit of ¥697.8B (Building ¥221.6 + Civil Engineering ¥260.6 + Paving ¥213.8 + Machinery ¥19.3 - Infrastructure Operations ¥17.5), representing recurring operating earnings. One-off factors included a gain on sale of affiliated company investments of ¥149.1B which boosted Profit Before Tax, while impairment losses of ¥74.3B were recorded as one-time charges. Financial income ¥396.8B is 3.5% of Revenue and includes dividend income ¥29.7B, interest income ¥24.3B, and valuation gains, exposing earnings to external factors such as interest rate environment and securities valuation volatility. Equity-method investment income (loss) of -¥5.8B reversed from prior year +¥13.6B, reflecting volatility in affiliate performance. With OCF at 2.5x Net Income and an accrual ratio of -5.7% the cash backing of earnings is strong. Comprehensive Income was ¥1,056.4B, exceeding Net Income ¥781.9B by ¥274.5B, contributed by Other Comprehensive Income ¥274.5B (of which valuation gains on FVOCI financial assets ¥209.9B and cash flow hedge ¥56.9B). Attention is required regarding realizability of valuation gains and the impact of interest rate fluctuations on future comprehensive income. The core of recurring income is the Construction Business's business profit, and ongoing evaluation of underlying earning power excluding one-off boosts from financial income and gains on affiliate disposals is necessary.
For the next fiscal year (FY2027 ending March 2027), the Full Year forecast is Revenue ¥13,660.0B (YoY +21.4%), Operating Income ¥778.0B (YoY +2.6%), Net Income Attributable to Owners of Parent ¥600.0B (YoY -21.6%), EPS forecast ¥229.26, and Dividend forecast ¥50.00. Revenue is expected to continue growing, but Net Income is projected to decline. This reflects assumed loss of one-off items (gain on sale of affiliated investments ¥149.1B and elevated financial income ¥396.8B), upfront integration costs related to the Sumitomo Mitsui Construction merger, the investment recovery schedule of renewable energy and concession businesses, and conservative assumptions on project progress allocation. Operating Income is planned to rise by +2.6%, assuming maintenance of business base profitability. The Dividend forecast of ¥50 is a substantial cut from the prior-year actual ¥120 (Year-end ¥90 + Interim ¥30), likely reflecting conservatism in the forecast and a review of dividend policy. Progress toward the full year target on an Operating Income basis is 97.4% (758.0/778.0), making full-year achievement almost certain, but Net Income already exceeds the forecast (this period Net Income Attributable to Owners of Parent ¥765.7B vs forecast ¥600.0B), leaving room for upward revision.
Annual dividend this period was ¥120 (Interim ¥30 + Year-end ¥90) with a Payout Ratio of 43.1% (Total dividends ¥177.4B / Net Income Attributable to Owners of Parent ¥765.7B × adjusted shares outstanding). FCF coverage is approximately 4.7x (FCF ¥1,535.2B / Dividends paid ¥177.4B), indicating strong resilience to dividend cuts. Share repurchases on the cash flow statement were essentially zero (-¥0.0B), making total return focused on dividends. A Payout Ratio of 43.1% emphasizes stable dividends; Retained Earnings are ¥3,491.6B (prior year ¥2,785.4B, +25.4%), suggesting ample room for dividend increases. The next fiscal year Dividend forecast of ¥50 is conservative and could be increased depending on earnings progress. DOE (dividend on equity) disclosed at 3.6% is consistent with equity growth (+18.9%). Because comparable historical dividend data are unavailable, this is a single-year assessment; given strong FCF coverage and rising retained earnings, dividend sustainability is assessed as high.
Margin volatility on large projects: Building and Civil Engineering businesses often operate under fixed-price contracts, and Contract Assets of ¥3,721.9B (prior year ¥2,301.4B, +61.7%) have increased significantly. Delays, material cost inflation, or design changes could alter progress margins, affecting future profit recognition and cash collection. Contract Liabilities ¥1,055.9B doubled from prior year ¥491.1B; while advance receipts support short-term liquidity, reliable fulfillment of performance obligations is required.
Financial leverage and interest rate rise risk: Interest-bearing debt (bonds & borrowings) totaled ¥5,733.0B (current ¥1,584.5B + non-current ¥4,148.6B), up +45.1% from prior year ¥3,951.8B, raising the D/E ratio. Although Interest Coverage is about 9.2x, in an environment of rising interest rates interest payments would increase and compress FCF. Absence of disclosure on fixed-rate ratio and refinancing plans makes sensitivity to interest rate movements unclear.
Goodwill and intangible asset impairment risk: Goodwill ¥1,762.8B (prior year ¥1,586.4B, +11.1%) and Intangible Assets ¥2,282.7B (prior year ¥2,343.4B, -2.6%) total ¥4,045.5B, representing 62.7% of Net Assets ¥6,452.3B. Goodwill/EBITDA multiple is about 5.7x (Goodwill ¥1,762.8B / EBITDA ¥1,204.1B), within tolerance, but failure to realize M&A synergies or deterioration in business conditions could trigger impairment losses. The company recorded impairment losses of ¥74.3B this period, underscoring the need for continuous recoverability monitoring.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 13.6% | 7.0% (3.0%–9.5%) | +6.6pt |
| Operating Margin | 6.7% | 5.5% (3.5%–7.2%) | +1.2pt |
| Net Margin | 7.0% | 3.5% (2.5%–4.4%) | +3.4pt |
The company’s ROE 13.6%, Operating Margin 6.7%, and Net Margin 7.0% all substantially exceed industry medians, indicating top-tier profitability within the construction sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 32.7% | 9.8% (-2.1%–15.1%) | +22.9pt |
Revenue Growth Rate 32.7% surpasses the industry median 9.8% by +22.9pt, highlighting rapid expansion driven by M&A integration and large project wins.
※ Source: Company aggregation
Structural improvement in profitability and strong cash generation: Improvements in Gross Margin to 14.6% (YoY +1.0pt) and Operating Margin to 6.7% (YoY +1.2pt) indicate successful price pass-through and work-type mix optimization. OCF is 2.5x Net Income and FCF ¥1,535.2B substantially exceeds dividends ¥177.4B, enabling both growth investment and shareholder returns. ROE 13.6% exceeds industry median 7.0% by +6.6pt, confirming high capital efficiency.
Stabilization of segment earnings and progress in investment recovery: Civil Engineering (Business Profit ¥260.6B, +65.0%) and Building (Business Profit ¥221.6B, +55.8%) are core, with Paving contributing steadily. Infrastructure Operations deficit narrowed (-¥17.5B, prior year -¥22.0B) and recovery of investments in renewable energy and concession businesses is progressing. The next fiscal year’s earnings decline forecast is conservative and appears to factor in one-off gains falling away and integration costs, leaving upside potential.
Elevated financial leverage and need to monitor interest and impairment risk: D/E ratio is high, though Interest Coverage ~9.2x, Current Ratio 140%, and Cash ¥3,609.8B support liquidity. However, increases in interest-bearing debt (+45.1%) and Contract Assets (+61.7%) warrant continued vigilance on capital efficiency and risk management. Monitoring results of goodwill impairment testing (Goodwill ¥1,762.8B) and the impact of rising interest rates on interest payments are key considerations.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your responsibility; consult a professional as needed before making investment decisions.