| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥402.4B | ¥370.6B | +8.6% |
| Operating Income | ¥25.2B | ¥20.2B | +24.8% |
| Ordinary Income | ¥38.0B | ¥30.5B | +24.6% |
| Net Income | ¥29.7B | ¥18.7B | +58.9% |
| ROE | 5.6% | 4.3% | - |
For the fiscal year ended March 2026, the company achieved substantial profit growth with Revenue ¥402.4B (YoY +¥31.7B +8.6%), Operating Income ¥25.2B (YoY +¥5.0B +24.8%), Ordinary Income ¥38.0B (YoY +¥7.5B +24.6%), and Net Income ¥29.7B (YoY +¥11.0B +58.9%). Operating margin improved to 6.3% from 5.5% a year earlier (+0.8pt), and net margin improved to 7.4% from 5.0% (+2.4pt). The core Sewer-related Business led consolidated profitability with Operating Income ¥26.1B (margin 18.2%) representing a large YoY increase of +34.8%. Non-operating and special gains—equity-method investment income ¥8.9B, dividend income ¥3.0B, and gains on sales of marketable securities ¥6.5B—also boosted profit lines. Conversely, Operating Cash Flow (OCF) deteriorated sharply to -¥34.8B (from +¥9.0B prior year, -487.5%) mainly due to an increase in trade receivables of ¥46.0B. Total assets expanded to ¥690.0B and total equity to ¥527.3B, maintaining a strong financial base with an Equity Ratio of 76.4%.
[Revenue] Revenue expanded solidly to ¥402.4B (YoY +8.6%). By segment, the Foundation Business recorded ¥243.0B (+6.9%), accounting for the largest share at 60.3%, supported by resilient demand for concrete piles. The Sewer-related Business achieved double-digit growth at ¥143.6B (+11.9%), capturing public infrastructure renewal demand centered on pipe rehabilitation works. The Solar Power & Real Estate Business increased slightly to ¥15.2B (+3.9%), and Other Businesses were ¥1.0B (+10.2%). Gross profit was ¥80.7B with a gross margin of 20.1% (up 0.5pt from 19.6%), aided by pass-through of raw material costs and improved project profitability.
[Profitability] SG&A was ¥55.4B (13.8% of sales), improving 0.3pt from 14.1% a year earlier, and Operating Income rose to ¥25.2B (Operating margin 6.3%), a substantial YoY increase of +24.8%. By segment, the Sewer-related Business delivered Operating Income ¥26.1B (margin 18.2%), up +34.8% YoY and the strongest growth; the Foundation Business posted ¥13.3B (+1.9%, margin 5.5%); the Solar Power & Real Estate Business ¥8.7B (+8.2%, margin 57.2%). Non-operating income totaled ¥13.5B, including equity-method investment income ¥8.9B, dividend income ¥3.0B, and foreign exchange gains ¥0.3B, while non-operating expenses were limited to ¥0.8B. Special gains were ¥8.0B (gains on sales of marketable securities ¥6.5B, gains on sales of fixed assets ¥1.3B) against special losses of ¥0.5B (including impairment losses of ¥2.0B), resulting in Pre-tax Income of ¥45.5B. After income taxes of ¥11.4B, Net Income was ¥29.7B (Net margin 7.4%). In summary, the company achieved both top-line and bottom-line growth.
The Foundation Business remained stable with Revenue ¥243.0B (YoY +6.9%), Operating Income ¥13.3B (+1.9%), and margin 5.5%. The Sewer-related Business recorded Revenue ¥143.6B (+11.9%), Operating Income ¥26.1B (+34.8%), and margin 18.2%, the highest growth driven by a higher proportion of high-margin pipe rehabilitation projects and improved utilization. The Solar Power & Real Estate Business posted Revenue ¥15.2B (+3.9%), Operating Income ¥8.7B (+8.2%), and margin 57.2%, maintaining high profitability. Other Businesses (rental, etc.) were Revenue ¥1.0B (+10.2%), Operating Income ¥0.9B (+10.8%), and margin 82.6%, contributing stably despite small scale. The Sewer-related Business’ Operating Income exceeded consolidated Operating Income of ¥25.2B, indicating it is the largest profit source before allocation of corporate overheads.
[Profitability] Operating margin of 6.3% improved 0.8pt from 5.5% a year prior, aided by a decline in cost of sales ratio to 79.9% and compression of SG&A ratio to 13.8%. Net margin of 7.4% improved 2.4pt from 5.0%, with significant contributions from non-operating income and special gains. ROE at 5.6% declined from 7.1% the prior year, primarily due to a denominator effect from a large increase in equity (¥430.8B → ¥527.3B). ROA (Ordinary Income / Total Assets) improved to 6.0% from 5.1% (+0.9pt). [Cash Quality] OCF / Net Income at -1.17x indicates a marked deterioration in cash quality, primarily driven by a large increase in trade receivables of ¥46.0B. Deterioration in working capital means profit growth has not translated into cash generation. [Investment Efficiency] Total asset turnover declined to 0.58x from 0.65x, with receivable buildup weighing on capital efficiency. ROIC (NOPAT / Invested Capital) is difficult to estimate due to negative OCF, but days sales outstanding of receivables at 112 days (Trade receivables ¥123.6B / daily sales ¥1.1B) shows a lengthening trend. [Financial Soundness] Equity Ratio improved slightly to 76.4% from 75.7%; interest-bearing debt is extremely low at ¥9.5B (short-term borrowings ¥8.3B + long-term borrowings ¥1.2B). Debt/Equity is 1.8%, Current Ratio 309.6%, Quick Ratio 268.4%, indicating very strong liquidity. Net cash of ¥93.5B (cash ¥103.0B - interest-bearing debt ¥9.5B) equals 13.5% of total assets, indicating ample financial capacity.
Operating Cash Flow was -¥34.8B (down sharply from +¥9.0B prior year), falling ¥47.8B below Net Income of ¥29.7B, with working capital deterioration the primary cause. Subtotal after adjustments (post pre-tax profit adjustments) was -¥30.7B, while changes in working capital—trade receivables increase -¥46.0B (ending balance ¥123.6B, up +54.9% from ¥79.8B), inventories increase -¥5.5B (ending balance ¥41.8B), and decrease in trade payables -¥6.3B—absorbed cash. Corporate taxes paid -¥11.3B also contributed to net outflow from operating activities. Investing Cash Flow was -¥32.4B, mainly due to acquisition of tangible fixed assets -¥22.0B (active investment at 2.5x depreciation ¥8.7B) and acquisition of subsidiary shares -¥16.9B. Proceeds from sale of marketable securities ¥10.1B offset purchase -¥5.2B, indicating portfolio rotation on a net basis. Financing Cash Flow was +¥40.8B, driven by disposal of treasury shares ¥57.9B (to accommodate increase in average shares outstanding during the period), offset by short-term borrowings -¥6.6B, dividends paid -¥10.2B, and share repurchases -¥6.5B. Free Cash Flow was -¥67.1B (OCF -¥34.8B + Investing CF -¥32.4B), and cash and cash equivalents decreased from ¥127.0B at the beginning of the period to ¥100.7B at year-end (a decline of ¥26.4B). Recovery of cash generation will require shortening receivable collection periods and leveling of project progress and billing timing.
On a recurring basis, Operating Income ¥25.2B is supplemented by equity-method investment income ¥8.9B and dividend income ¥3.0B as stable contributors. One-off items include special gains ¥8.0B (gains on sales of marketable securities ¥6.5B, gains on sales of fixed assets ¥1.3B) and special losses ¥0.5B (impairment losses ¥2.0B, losses on disposal of fixed assets ¥0.2B), yielding a net +¥7.5B that boosted Net Income. The gap between Ordinary Income ¥38.0B and Net Income ¥29.7B is largely explained by tax expense ¥11.4B and non-controlling interests ¥0.3B, with no anomalies. However, OCF of -¥34.8B is far below Net Income, and accruals (Net Income - OCF) are +¥64.5B, equivalent to 9.3% of total assets. The main cause is an increase in trade receivables of ¥46.0B, reflecting a widening timing gap between revenue recognition under percentage-of-completion or completion methods and cash collection. Comprehensive income was ¥54.9B (attributable to parent ¥54.6B), exceeding Net Income by ¥25.2B, primarily due to an unrealized gain on securities valuation of ¥20.2B. While recurring earnings are stable, reliance on one-off gains is somewhat high and delays in cash conversion are lowering earnings quality.
Full-year guidance calls for Revenue ¥455.0B (YoY +13.1%), Operating Income ¥29.0B (+14.9%), Ordinary Income ¥41.0B (+7.9%), and Net Income ¥34.0B (+0.6%). The plan assumes growth at the operating and ordinary income levels while Net Income remains roughly flat, incorporating the drop-off of this fiscal year’s one-off gains (e.g., gains on sales of marketable securities ¥6.5B). Revenue assumptions rest on order expansion in both the Foundation and Sewer-related businesses, with an anticipated Operating margin of 6.4% essentially maintaining current-year levels. The slower growth in Ordinary Income relative to Operating Income is likely due to an assumed reduction in non-operating income. Dividend guidance is year-end ¥13 per share (post-split), effectively described as an increase versus the prior year. Progress ratios for the year are Revenue 88.4%, Operating Income 87.0%, Ordinary Income 92.7%, which are generally on track; Net Income progress of 87.4% is somewhat elevated due to one-off gains. Next fiscal year, achieving business profit growth and normalization of working capital are key catalysts.
Dividends were paid as an interim ¥22 per share (pre-split) and year-end ¥13 per share (post-split), interpreted as an effective YoY increase. Payout Ratio is 29.2%, leaving room, and total dividends amounted to ¥10.2B (consolidated payout basis), which corresponds to 34.3% of Net Income ¥29.7B. Including share buybacks of ¥6.5B, the Total Return Ratio is approximately 56%, but given Free Cash Flow of -¥67.1B, distributions were funded from cash on hand and proceeds from disposal of treasury shares. Disposal of treasury shares ¥57.9B (executed during the period) increased average shares outstanding during the period to 46,708 thousand shares, causing dilution. A payout ratio of 29.2% is sustainable, but without FCF improvement, scope for further dividend increases is limited. Given substantial net cash of ¥93.5B, near-term dividend continuity is not an issue, but normalization of working capital is a prerequisite for expanding shareholder returns.
Receivables collection prolongation risk: A sharp rise in trade receivables to ¥123.6B (YoY +54.9%) caused Operating Cash Flow to deteriorate to -¥34.8B. Days sales outstanding of about 112 days has lengthened, and working capital pressure burdens capital efficiency (a factor in ROIC decline) and liquidity management. The mismatch between recognition of progress on large construction projects and collection timing is the main cause; urgent measures are needed to revise contract terms and improve collection processes. Continued prolongation could raise bad debt risk and increase financing pressure.
One-off gain dependency risk: Special gains of ¥8.0B (gains on sales of marketable securities ¥6.5B, gains on sales of fixed assets ¥1.3B) accounted for 26.9% of Net Income ¥29.7B. Next fiscal year’s forecast assumes the absence of such one-off gains and leaves Net Income flat, implying limited growth from core business profits alone. Marketable securities balance of ¥235.1B (34.1% of total assets) boosted comprehensive income, but reversals in market conditions could lead to valuation losses. Stabilizing recurring earnings is a mid-term challenge.
Segment concentration risk: High dependence on the Foundation Business (Revenue ¥243.0B, 60.3% of sales) is notable; its Operating margin of 5.5% is lower than the Sewer-related Business at 18.2%. Fluctuations in public investment trends and private construction demand directly affect performance, and raw material price increases (cement, steel) could compress margins. Although the Sewer-related Business contributes strongly to profits, its sales share is 35.7% and thus only partially offsets concentration, limiting portfolio diversification benefits.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.3% | 7.8% (4.6%–12.3%) | -1.5pt |
| Net Margin | 7.4% | 5.2% (2.3%–8.2%) | +2.2pt |
Operating margin is 1.5pt below the industry median, while Net margin is 2.2pt above the median, reflecting a higher final-stage profitability within the industry due to non-operating and special gains.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.6% | 3.7% (-0.4%–9.3%) | +4.9pt |
Revenue growth of 8.6% outperformed the industry median of 3.7% by 4.9pt, reflecting strong capture of infrastructure renewal demand.
※Source: Company compilation
The most notable point of the results is the high-margin shift in the Sewer-related Business. Its Operating margin of 18.2% improved +3.2pt YoY, and Operating Income ¥26.1B (+34.8%) exceeded consolidated Operating Income ¥25.2B. This was driven by a higher share of high-margin pipe rehabilitation projects and improved utilization, effectively leveraging tailwinds from public infrastructure renewal demand. Maintaining margin and expanding orders in this segment will remain key to consolidated performance.
The severe deterioration in OCF (-¥34.8B) and the sharp rise in trade receivables (+¥46.0B) are the most urgent short-term issues. With Net Income ¥29.7B but negative OCF, working capital inefficiency is pressuring capital efficiency and liquidity management. Receivable collection days of about 112 days necessitate contract term reviews and enhancements to collection processes; normalization will be a catalyst for next fiscal year. Without FCF improvement of -¥67.1B, scope for dividend increases or additional investments is limited.
Strong financial base and unrealized gains on marketable securities support medium- to long-term stability. Equity Ratio 76.4%, net cash ¥93.5B, and interest-bearing debt ¥9.5B reflect a conservative capital structure, and comprehensive income ¥54.9B was significantly above Net Income due to an unrealized securities valuation gain of ¥20.2B. Marketable securities balance ¥235.1B (34.1% of total assets) entails market risk but also provides liquidity options in emergencies and supports dividends and additional investment.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed.