| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥492.3B | ¥526.5B | -6.5% |
| Operating Income | ¥3.2B | ¥9.9B | -67.4% |
| Ordinary Income | ¥12.8B | ¥14.5B | -11.6% |
| Net Income | ¥-3.0B | ¥-6.6B | +54.0% |
| ROE | -0.6% | -1.6% | - |
For the fiscal year ended March 2026, Revenue was ¥492.3B (YoY ▲¥34.2B ▲6.5%), Operating Income was ¥3.2B (YoY ▲¥6.7B ▲67.4%), Ordinary Income was ¥12.8B (YoY ▲¥1.7B ▲11.6%), and Net Income attributable to owners of parent was ¥6.8B (previous year net loss of ▲¥2.1B; turned positive). The company experienced lower revenue and profit, with Operating Income falling to ¥3.2B (Operating margin 0.7%, down ▲1.2pt from 1.9% a year earlier), hurt by the core Foundations Business turning to a loss and increased SG&A. Conversely, non-operating income of ¥12.9B (equity-method investment gains ¥4.4B, dividend income ¥4.1B) and special gains ¥7.8B (gain on sale of investment securities ¥7.7B) provided support, resulting in a final profit, but the business structure shows high dependence on non-core income.
[Revenue] Revenue amounted to ¥492.3B, down YoY by ▲¥34.2B (▲6.5%). By segment, the Foundations Business recorded ¥220.2B (▲9.1%) and the Concrete Secondary Products Business recorded ¥269.1B (▲4.3%), both declining, with demand weakness and fewer projects in the two main businesses dragging overall sales. The Foundations Business was affected by reduced orders for piling and ground improvement works, and the Concrete Secondary Products Business was impacted by lower sales of poles and civil engineering products. The Real Estate & Solar Power Business edged up to ¥3.1B (+2.0%) and remains a limited portion of revenues at 0.6% of the total.
[Profitability] Cost of goods sold totaled ¥410.7B, leaving Gross Profit of ¥81.6B (gross margin 16.6%, a +0.1pt improvement from 16.5% a year earlier), remaining broadly flat. SG&A rose to ¥78.4B (SG&A ratio 15.9%, worsening +1.3pt from 14.6% a year earlier), pushing Operating Income down to ¥3.2B (Operating margin 0.7%, down ▲1.2pt from 1.9%). By segment, the Concrete Secondary Products Business secured stable earnings with Operating Income of ¥22.2B (margin 8.3%), while the Foundations Business swung to an Operating loss of ▲¥1.9B (margin ▲0.9%), which significantly compressed consolidated operating profit. Non-operating income was ¥12.9B, principally equity-method gains ¥4.4B and dividend income ¥4.1B. Non-operating expenses were ¥3.3B (including interest expenses ¥1.4B), resulting in Ordinary Income of ¥12.8B (Ordinary Income margin 2.6%, down ▲0.2pt from 2.8%). The company recorded special gains of ¥7.8B (gain on sale of investment securities ¥7.7B) and special losses of ¥2.5B (impairment loss ¥0.2B, loss on retirement of fixed assets ¥0.2B), yielding Profit before Tax of ¥18.1B. After corporate taxes ¥9.9B and Net Income attributable to non-controlling interests ¥1.4B, Net Income attributable to owners of parent was ¥6.8B (Net margin 1.4%), a turnaround from the prior-year loss, though the gap between Ordinary Income and Net Income reflects the contribution of special gains. In conclusion, the trend is lower revenue and profit at the operating level, with declines in operating profitability offset by non-operating and one-off gains.
The Foundations Business posted Revenue of ¥220.2B (▲9.1%) and an Operating loss of ▲¥1.9B (margin ▲0.9%, down from +0.5% the prior year), a deterioration of ▲¥3.1B from the prior-year operating profit of ¥1.2B, driven by worsening project profitability and SG&A burden. The Concrete Secondary Products Business reported Revenue of ¥269.1B (▲4.3%) and Operating Income of ¥22.2B (margin 8.3%, down ▲0.1pt from 8.4%), maintaining stable earnings despite a slight decline. Operating Income declined by ▲¥1.3B (▲5.5%) from ¥23.5B the prior year but remains the primary profit generator for the group. The Real Estate & Solar Power Business recorded Revenue of ¥3.1B (+2.0%) and Operating Income of ¥1.9B (margin 59.2%, down ▲2.6pt from 61.8%), maintaining high margins but limited scale and contribution to consolidated results.
[Profitability] Operating margin 0.7% (down ▲1.2pt from 1.9%), Net margin 1.4% (improved from ▲0.4% a year earlier but still low), indicating weak core earning power. ROE (based on Net Income attributable to owners of parent) 1.5% (improved from ▲0.6% but still low), ROA (based on Ordinary Income) 1.6% (down ▲0.3pt from 1.9%), showing low capital efficiency. [Cash Quality] Operating Cash Flow (OCF) ¥25.1B, OCF/Net Income (attributable to owners of parent) 3.67x, indicating solid cash generation. OCF/EBITDA (Operating CF / (Operating Income + Depreciation)) is 1.24x, showing healthy cash conversion. [Investment Efficiency] Total asset turnover 0.56x/year (Revenue ¥492.3B / Total assets ¥876.9B), low, with investment securities ¥240.3B (27.4% of total assets) weighing on turnover. CapEx/Depreciation is 1.47x (CapEx ¥24.9B / Depreciation ¥17.0B), indicating investment in excess of depreciation. [Financial Soundness] Equity Ratio 55.2% (improved +7.3pt from 47.9% prior year), interest-bearing debt ¥100.5B (short-term borrowings ¥41.7B, long-term borrowings ¥58.7B, long-term borrowings due within one year ¥23.7B, bonds and bonds maturing within one year ¥0.6B), Debt/Equity 22.0%, reflecting a conservative capital structure. Current ratio 129.9%, Quick ratio 100.4%, indicating short-term liquidity at a lower bound; cash ¥70.2B versus short-term borrowings ¥41.7B provides limited headroom.
Operating Cash Flow was ¥25.1B (a significant improvement from a prior-year ▲¥3.0B), generated from subtotal (pre-tax, pre-interest CF) ¥28.2B after movements in working capital, taxes, and interest. Working capital changes included a cash inflow from decreases in accounts receivable and contract assets of +¥17.9B, offset by increases in inventories ▲¥4.6B and decreases in accounts payable ▲¥12.3B, resulting in net working capital inflow of +¥1.0B. After corporate tax payments ▲¥6.6B, interest received +¥4.5B, and interest paid ▲¥1.3B, Operating CF was ¥25.1B. Investing CF was ▲¥15.3B, driven mainly by CapEx ▲¥24.9B, partially offset by proceeds from sale of investment securities +¥10.7B. Free Cash Flow was ¥9.8B (Operating CF ¥25.1B + Investing CF ▲¥15.3B), which covered dividend payments ▲¥5.7B and share buybacks ▲¥0.0B; Financing CF was ▲¥11.2B (repayment of long-term borrowings ▲¥23.7B, new borrowings +¥20.0B, net increase in short-term borrowings +¥0.7B, lease repayments ▲¥1.6B, dividends & minority payouts ▲¥5.9B, others ▲¥0.2B). Cash decreased from ¥70.3B at the beginning of the period to ¥68.9B at the end, a decline of ▲¥1.3B (including foreign exchange effects +¥0.1B, net decline ▲¥1.3B). The large improvement in Operating CF primarily reflects the reversal from prior-year working capital increases (inventory build +¥11.0B, increase in accounts receivable ▲¥17.0B) and smoothing of corporate tax payments, indicating recovery in basic cash generation capability.
Ordinary Income ¥12.8B versus Net Income attributable to owners of parent ¥6.8B, a decline of ▲¥6.0B from ordinary to final profit, driven by tax burden ¥9.9B (effective tax rate 54.5%) and Net Income attributable to non-controlling interests ¥1.4B, which more than offset the net special gains of +¥5.3B (special gains ¥7.8B less special losses ¥2.5B). The main component of special gains was the gain on sale of investment securities ¥7.7B, a low-repeatability, one-off item. Of non-operating income ¥12.9B, dividend income ¥4.1B and equity-method investment gains ¥4.4B were the principal items, meaning non-operating income substantially elevated Ordinary Income relative to Operating Income of ¥3.2B. With Operating CF ¥25.1B versus Net Income ¥6.8B, OCF/Net Income is 3.67x indicating strong cash conversion, but given the large contribution of special gains, the company’s recurring earning power is reflected in low Operating Income. Comprehensive Income was ¥85.6B, with ¥83.9B attributable to owners of parent; alongside Net Income ¥6.8B, Other Comprehensive Income (valuation difference on available-for-sale securities +¥55.9B, adjustments related to retirement benefits +¥21.1B, foreign currency translation adjustments +¥0.2B, OCI of equity-method investees +¥0.1B) accounted for ¥77.1B, with valuation gains substantially boosting comprehensive income. Accrual quality is considered good given strong Operating CF generation, but the final profit composition is highly dependent on one-off and non-operating items, so sustainability requires cautious assessment.
The full-year forecast calls for Revenue ¥550.0B (vs. this period +11.7%), Operating Income ¥19.0B (vs. this period +488.7%), Ordinary Income ¥24.0B (vs. this period +87.0%), and EPS forecast ¥23.94. Operating Income is expected to increase roughly sixfold from ¥3.2B to ¥19.0B, indicating a V-shaped recovery, which likely assumes elimination of losses in the Foundations Business and revenue growth/maintained margins in the Concrete Secondary Products Business. Progress rates are Revenue 89.5% (¥492.3B/¥550.0B), Operating Income 16.8% (¥3.2B/¥19.0B), Ordinary Income 53.3% (¥12.8B/¥24.0B), showing slow progress on Operating Income and assumptions of significant earnings improvement in H2. Dividend guidance is annual ¥5.0 (down from ¥8.0 this period), implying a payout ratio of 20.9% against forecast EPS ¥23.94, a more conservative level. Realization depends on thorough price pass-through, project selection and margin improvement in the Foundations Business, and uplift in utilization rates.
Dividends declared were interim ¥4.0 and year-end ¥4.0, total annual ¥8.0 (same as prior year), with total dividends of ¥7.1B against Net Income attributable to owners of parent ¥6.8B, implying a payout ratio of 104.4% (the reported figure 63.5% is presumed to be based on a different denominator). Against Free Cash Flow ¥9.8B, dividends ¥7.1B give an FCF coverage of 1.38x, indicating capacity to pay. Full-year guidance reduces dividends to annual ¥5.0, implying a payout ratio of 20.9% against forecast EPS ¥23.94, a shift to a more conservative, sustainability-focused return policy. Share buybacks were effectively zero (▲¥0.0B), so shareholder returns are dividend-centric. This period’s final profit was supported by special gains ¥7.8B; next year the company plans to restrain dividends pending recovery in Operating Income, prioritizing sustainability of returns.
Risk of continued losses in the Foundations Business: The company recorded an operating loss of ▲¥1.9B this period, a deterioration of ▲¥3.1B from the prior-year operating profit of ¥1.2B, caused by declining project profitability and SG&A burden. If the planned elimination of losses under the V-shaped recovery fails, consolidated operating profit will remain under pressure. Recovery of profitability in the core business that accounts for 45% of revenues is key to achieving the plan.
Earnings vulnerability from dependence on non-operating and one-off gains: With Operating Income ¥3.2B (margin 0.7%), non-operating income ¥12.9B (equity-method ¥4.4B, dividends ¥4.1B) and special gains ¥7.8B (gain on sale of investment securities ¥7.7B) elevated Ordinary and Net Income. If core earning power remains weak, changes in the external environment (deterioration of equity-method investees’ performance, reversal of unrealized gains on holdings) could lead to large profit volatility.
Short-term liquidity and refinancing risk: Current ratio 129.9% and Quick ratio 100.4% indicate short-term liquidity at a lower bound. Against short-term borrowings ¥41.7B and long-term borrowings due within one year ¥23.7B (total ¥65.4B), the company relies on cash ¥70.2B and accounts receivable ¥67.9B. Although Operating CF generation has improved, persistent low Operating margin of 0.7% could make refinancing terms worse in a rising interest-rate environment or increase short-term funding costs, pressuring the financial position.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | 0.7% | 7.8% (4.6%–12.3%) | -7.1pt |
| Net margin | -0.6% | 5.2% (2.3%–8.2%) | -5.8pt |
Operating margin 0.7% is 7.1pt below the industry median of 7.8%, placing the company in the lower tier of manufacturing profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth (YoY) | -6.5% | 3.7% (-0.4%–9.3%) | -10.2pt |
Revenue growth of ▲6.5% is 10.2pt below the industry median of +3.7%, underperforming industry peers.
※ Source: Company compilation
While the balance sheet was strengthened by a large improvement in Operating CF and expansion of unrealized gains on investment securities, core earning power (Operating margin 0.7%) remains low. The company plans a substantial recovery to Operating Income ¥19.0B (about sixfold), which presumes elimination of losses in the Foundations Business and successful price pass-through. The plan concentrates earnings in H2, so monitoring H1 results and order trends is important.
Final profit was supported by special gains ¥7.8B (gain on sale of investment securities ¥7.7B) and non-operating income (equity-method ¥4.4B, dividends ¥4.1B), with limited repeatability. Of Comprehensive Income ¥85.6B, valuation difference on available-for-sale securities +¥55.9B and retirement benefit adjustments +¥21.1B boosted equity, but the risk of reversal of valuation differences due to market volatility warrants attention. Dividends are scheduled to be cut from ¥8.0 to ¥5.0 annually, shifting to a sustainability-focused return policy.
CapEx/Depreciation 1.47x implies investment exceeding depreciation and progress in renewing aging assets (buildings 76%, machinery 92%). CapEx ¥24.9B (5.1% of Revenue) aims to strengthen medium-term competitiveness, but with Operating margin at 0.7%, scrutiny of payback certainty and realization of utilization improvements is critical. Escaping the very low profitability relative to manufacturing peers requires simultaneous implementation of price pass-through, project selection, and productivity enhancement.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; consult professionals as necessary before making investment decisions.