| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥275.9B | ¥286.5B | -3.7% |
| Operating Income | ¥18.7B | ¥20.2B | -7.6% |
| Ordinary Income | ¥30.1B | ¥31.1B | -3.2% |
| Net Income | ¥27.5B | ¥30.9B | -10.8% |
| ROE | 6.0% | 7.2% | - |
Cumulative results for the first three quarters of the current fiscal year reflected declines in both revenue and earnings. The decrease in revenue from the core Foundation Business and an increase in company-wide expenses weighed on results, causing Operating Income to fall below the previous year. Revenue was ¥275.9B (-3.7% YoY), Operating Income was ¥18.7B (-7.6%), Ordinary Income was ¥30.1B (-3.2%), and Net Income attributable to the consolidated group was ¥27.5B (-10.8%). Ordinary Income was supported by non-operating income (dividend income of ¥2.96B, equity-method investment gain of ¥7.57B, etc.) and therefore did not deteriorate to the same extent as the decline in Operating Income. However, Net Income declined by more than Ordinary Income due to an increase in the effective tax rate (20.3% in the previous year → 25.9% in the current period).
【Revenue】The Foundation Business, which accounts for 59.2% of the segment revenue mix, posted an -11.1% decline in revenue, weighing on the company-wide top line. Meanwhile, the Sewerage-Related Business (36.5% of the mix) recorded a +9.9% increase in revenue, and the Solar Power Generation and Real Estate Business (4.2% of the mix) also remained solid with a +5.1% increase in revenue. However, these gains were insufficient to offset the decline in the Foundation Business, resulting in company-wide Revenue of ¥275.9B (-3.7%).
【Profit and Loss】The gross profit margin improved by +0.6pt to 21.0% from 20.4% in the previous year (cost ratio: 79.6% → 79.0%). However, the SG&A expense ratio rose by +0.9pt from 13.4% to 14.2%, causing the Operating Income margin to decline by -0.3pt to 6.8% (7.1% in the previous year). By segment, the Sewerage-Related Business (+18.7%) and Solar-Related Business (+10.2%) posted higher earnings, while the Foundation Business recorded a substantial -25.0% decline in earnings. Company-wide expenses not attributable to reportable segments also increased by +10.4% YoY. These factors were the primary causes of the -7.6% decline in Operating Income. Ordinary Income was supported by ¥11.8B in non-operating income (dividend income of ¥2.96B, equity-method investment gain of ¥7.57B, etc.), limiting the decline in Ordinary Income (-3.2%) to less than the decline in Operating Income. Extraordinary income of ¥7.5B (including a ¥6.5B gain on the sale of investment securities) exceeded extraordinary losses of ¥0.4B, resulting in Profit Before Tax of ¥37.1B (-4.0% YoY). However, Net Income declined by more than Ordinary Income due to the higher effective tax rate, falling to ¥27.5B (-10.8%). In conclusion, both revenue and earnings declined.
The Foundation Business was the primary cause of the company-wide declines in revenue and earnings, with revenue of ¥163.4B (59.2% of the mix, YoY -11.1%), Operating Income of ¥10.5B (YoY -25.0%), and a profit margin of 6.4% (-1.2pt from 7.6% in the previous year). The Sewerage-Related Business recorded revenue of ¥100.6B (36.5% of the mix, YoY +9.9%), Operating Income of ¥18.5B (YoY +18.7%), and a profit margin of 18.3% (+1.3pt from 17.0% in the previous year), showing simultaneous growth in revenue and earnings and an improvement in profitability. The Solar Power Generation and Real Estate Business recorded revenue of ¥11.5B (4.2% of the mix, YoY +5.1%) and Operating Income of ¥6.6B (YoY +10.2%), maintaining its high profit margin of 57.5%. The impairment loss recorded by this business in the same period of the previous year did not occur in the current period. Company-wide expenses not attributable to reportable segments (adjustments) increased by +10.4%, from ¥15.8B in the previous year to ¥17.5B in the current period, serving as a factor weighing on Operating Income.
【Profitability】The Operating Income margin declined by -0.3pt to 6.8% from 7.1% in the previous year, while the Net Income margin attributable to owners of the parent declined to 9.9% from 10.7% in the previous year. ROE was 6.0%, trending downward from the previous year's level (approximately 7.2%). 【Cash Quality】Cash and deposits declined by -48.0% to ¥66.3B from ¥127.5B in the previous year, while accounts receivable increased by +31.2% to ¥104.7B from ¥79.8B. The differing directions of these two items suggest a change in the cash collection cycle. 【Investment Efficiency】The total asset turnover ratio declined to approximately 0.47x from 0.50x in the previous year. Investment securities of ¥225.9B accounted for 38.7% of total assets, indicating a structure in which asset efficiency is highly dependent on the investment portfolio. 【Financial Soundness】The Equity Ratio rose by +4.4pt to 78.8% from 74.4% in the previous year, while interest-bearing debt remained low at ¥8.3B. Short-term payment capacity remained strong, with a current ratio of 347.8% and a quick ratio of 289.1%.
As the statement of cash flows has not been disclosed, cash trends are assessed based on changes in the balance sheet. Cash and deposits declined by ¥61.2B (-48.0%) to ¥66.3B from ¥127.5B in the previous year, while accounts receivable increased by ¥24.9B (+31.2%) to ¥104.7B from the previous year, and investment securities increased by ¥23.2B (+11.7%) to ¥225.9B. The simultaneous decrease in cash and increase in accounts receivable indicate a change in the pace of cash collection from operating activities. Property, plant and equipment increased by +¥8.1B to ¥106.7B from ¥98.6B in the previous year, indicating that capital investment has continued. Short-term borrowings of ¥8.3B were unchanged from the previous year, and reliance on interest-bearing debt remains limited.
Of Ordinary Income of ¥30.1B, non-operating income of ¥11.8B (dividend income of ¥2.96B, equity-method investment gain of ¥7.57B, etc.) made a significant contribution. While these represent recurring income from investment securities and equity-method affiliates, the comparison with Operating Income of ¥18.7B indicates a structure in which a considerable portion of earnings is supplemented by non-operating and extraordinary items. Extraordinary income of ¥7.5B primarily consisted of a ¥6.5B gain on the sale of investment securities and represents a temporary factor dependent on market conditions. Extraordinary losses of ¥0.4B consisted of losses on the disposal of fixed assets, etc., while the ¥2.0B impairment loss recorded in the Solar Power Generation and Real Estate Business and other businesses in the same period of the previous year did not occur in the current period. Comprehensive Income was ¥45.3B, exceeding Net Income of ¥27.5B by ¥17.8B. The primary factor was a +¥17.2B valuation difference on securities resulting from an increase in the market value of held shares. The divergence between Net Income and Comprehensive Income reflects fluctuations in unrealized gains on held securities and should be considered separately from recurring operating performance.
The full-year company forecast is Revenue of ¥400.0B (YoY +7.9%), Operating Income of ¥23.0B (YoY +13.7%), Ordinary Income of ¥34.0B (YoY +11.5%), Net Income attributable to owners of the parent of ¥30.0B, and EPS of ¥64.47. Cumulative results for the first three quarters reached 69.0% of the full-year forecast for Revenue at ¥275.9B, 81.2% for Operating Income at ¥18.7B, 88.5% for Ordinary Income at ¥30.1B, and 91.4% for Net Income attributable to owners of the parent at ¥27.4B. Although the company expects higher revenue and earnings for the full year, cumulative results reflected declines in both revenue and earnings. Trends in fourth-quarter revenue and earnings will be key to achieving the full-year targets. As of Q3, no revisions had been made to the earnings forecast.
An interim dividend of ¥22 per share was paid. The year-end dividend forecast is ¥13.00, based on the post-split basis following the stock split effective January 1, 2026 (2 shares for each 1 common share); on a pre-split basis, this corresponds to ¥26. Due to the impact of the stock split, a simple aggregation of the annual dividends is not possible, and the company has therefore stated its annual dividend forecast as “—”. As of Q3, no revisions had been made to the dividend forecast. Treasury shares increased from ¥34.96B in the previous year to ¥41.23B in the current period on the balance sheet, suggesting that share repurchases were conducted. Against 58,695 thousand issued shares, treasury shares amounted to 12,559 thousand shares (21.4%).
Order intake and revenue volatility risk in the core segment: Revenue in the Foundation Business declined significantly to ¥163.4B (YoY -11.1%), while Operating Income fell to ¥10.5B (YoY -25.0%). The timing and duration of orders related to public works may cause fluctuations in performance.
Changes in working capital efficiency: Accounts receivable increased by +31.2% to ¥104.7B from the previous year, expanding in the opposite direction to Revenue. Cash and deposits declined by -48.0% from the previous year to ¥66.3B, making trends in the cash collection cycle an area of focus.
Dependence on investment securities and equity-method income: Investment securities totaled ¥225.9B, accounting for 38.7% of total assets. Non-operating income (dividend income of ¥2.96B and equity-method investment gain of ¥7.57B) and extraordinary income (gain on the sale of investment securities of ¥6.54B) supported Ordinary Income and Net Income. These sources of income may fluctuate with market conditions.
Profitability and Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 6.8% | 8.9% (5.4%–12.7%) | -2.1pt |
| Net Income Margin | 10.0% | 6.5% (3.3%–9.4%) | +3.5pt |
The Operating Income margin is below the industry median, while the Net Income margin exceeds the industry median due to contributions from investment securities-related income and other factors.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -3.7% | 2.8% (-1.5%–8.8%) | -6.5pt |
Revenue growth is significantly below the industry median, placing the company among the industry participants experiencing revenue declines.
※Source: Compiled by the Company
While growth in revenue and earnings in the Sewerage-Related Business (profit margin of 18.3%, +1.3pt) supported company-wide profitability, the decline in revenue and earnings in the Foundation Business (-25.0%) weighed on overall results, highlighting the divergence among segments.
Ordinary Income and Net Income are highly dependent on non-operating income and extraordinary income (including gains on the sale of investment securities). The divergence between Comprehensive Income (¥45.3B) and Net Income (¥27.5B) reflects fluctuations in unrealized gains on held securities.
Cash and deposits declined (-48.0%) while accounts receivable increased (+31.2%), making working capital trends a key monitoring point going forward.
This report is an earnings analysis document automatically generated by AI based on XBRL financial summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.
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These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Per-share values are adjusted to the latest share basis for stock splits. Historical values are computed retrospectively using current guidance-achievement statistics.