| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥201.9B | ¥203.3B | -0.7% |
| Operating Income / Operating Profit | ¥26.9B | ¥30.6B | -11.9% |
| Ordinary Income | ¥28.5B | ¥32.5B | -12.5% |
| Net Income | ¥19.7B | ¥24.3B | -18.9% |
| ROE | 2.5% | 3.1% | - |
For Q1 of FY ending March 2026, Revenue / Net Sales were ¥201.9B (YoY -¥1.4B, -0.7%), Operating Income was ¥26.9B (YoY -¥3.6B, -11.9%), Ordinary Income was ¥28.5B (YoY -¥4.0B, -12.5%), and Net income attributable to owners of parent for the quarter was ¥19.3B (YoY -¥4.7B, -19.7%). The Disaster Prevention & Infrastructure Business led the company with strong performance (Revenue +17.7%, Operating Income +61.4%), while the Environmental & Energy Business posted a large decline (Revenue -14.6%, Operating Income -62.2%), and the International Business continued to record losses (¥-4.3B vs prior year -¥2.5B), which worsened the overall mix and resulted in lower revenue and profit. Operating margin declined to 13.3% (prior year 15.0%, -1.7pt) and net margin to 9.6% (prior year 11.8%, -2.2pt). Progress against the full-year plan is: Revenue 26.9%, Operating Income 64.1%, Ordinary Income 59.4%, Net Income 49.5%, indicating profit-side outperformance versus plan.
Revenue: Revenue was ¥201.9B (YoY -0.7%), a slight decline. By segment, Disaster Prevention & Infrastructure posted ¥99.8B (+17.7%), driving consolidated performance. Strong public investment execution and rising disaster-prevention demand contributed; external sales expanded from ¥84.1B to ¥99.1B year-on-year. Conversely, Environmental & Energy declined to ¥65.7B (-14.6%) from ¥76.9B due to a timing gap in projects. International Business declined to ¥37.9B (-12.3%) from ¥43.3B. Revenue mix shifted to Disaster Prevention & Infrastructure 49.2% (prior year 41.4%), Environmental & Energy 32.5% (37.7%), International 18.8% (21.0%), indicating a move toward the core business. Gross profit was ¥73.9B with a gross margin of 36.6% (prior year 37.2%, -0.6pt), a slight deterioration.
Profitability: Operating Income was ¥26.9B (YoY -11.9%). Disaster Prevention & Infrastructure Operating Income was ¥24.2B (+61.4%) with a margin of 24.3% (prior year 17.7%, +6.6pt), supporting consolidated results. However, Environmental & Energy Operating Income was ¥6.7B (-62.2%) with margin 10.2% (prior year 23.0%, -12.8pt) and International Business recorded an operating loss of ¥4.3B (worsening from prior year -¥2.3B), offsetting gains. SG&A was ¥47.0B, up from ¥45.0B (+4.3%), raising the SG&A ratio to 23.3% (prior year 22.1%, +1.2pt). Operating margin fell to 13.3% (prior year 15.0%, -1.7pt). Ordinary Income was ¥28.5B (-12.5%); non-operating income was ¥1.9B (including equity in earnings of affiliates ¥0.5B, interest income ¥0.6B, foreign exchange gains ¥0.3B), and non-operating expenses were ¥0.4B (interest expense ¥0.2B), yielding an ordinary income margin of 14.1% (prior year 16.0%, -1.9pt). Extraordinary items were minor (extraordinary income ¥0.5B, extraordinary losses ¥0.4B), resulting in profit before tax of ¥28.6B, corporate taxes ¥8.9B (effective tax rate 31.1%), and non-controlling interests ¥0.4B, producing Net income attributable to owners of parent of ¥19.3B (YoY -19.7%). Net margin declined to 9.6% (prior year 11.8%, -2.2pt). In conclusion, while the core business delivered higher revenue and profit, significant declines in other segments led to consolidated revenue and profit declines.
Disaster Prevention & Infrastructure Business achieved high growth and high profitability with Revenue ¥99.8B (+17.7%) and Operating Income ¥24.2B (+61.4%). Operating margin of 24.3% (prior year 17.7%) improved by +6.6pt, demonstrating improved profitability. Steady progress on public infrastructure projects and an increase in high-margin projects contributed. Environmental & Energy Business recorded Revenue ¥65.7B (-14.6%) and Operating Income ¥6.7B (-62.2%), a large decline. Operating margin deteriorated to 10.2% (prior year 23.0%, -12.8pt), pressured by changes in project mix and lower project profitability. International Business posted Revenue ¥37.9B (-12.3%) and an operating loss of ¥4.3B (prior year -¥2.3B), widening the loss; margin -11.3% (prior year -5.4%), indicating deterioration. Delays in overseas project progress and cost increases appear to have impacted results. Of consolidated Operating Income ¥26.9B, Disaster Prevention & Infrastructure contributed ¥24.2B, about 90%, so improving profitability in other segments is key to restoring consolidated margins.
Profitability: Operating margin 13.3% (prior year 15.0%, -1.7pt), Net margin 9.6% (prior year 11.8%, -2.2pt) indicate declined profitability. A slight contraction in gross margin to 36.6% (prior year 37.2%, -0.6pt) and rise in SG&A ratio to 23.3% (prior year 22.1%, +1.2pt) compressed margins. ROE 2.5% declined from prior year, primarily due to weaker Net margin.
Cash Quality: Days Sales Outstanding (DSO) / receivables turnover days 56 days (prior year 61 days, -5 days improvement) indicating improved collections. Inventory turnover days 66 days (prior year 60 days, +6 days deterioration) reflects an increase in inventories to ¥23.3B (prior year ¥21.2B). Accounts payable turnover days 28 days (prior year 41 days, -13 days shortening) due to a decrease in accounts payable to ¥9.7B (prior year ¥14.3B, -32.1%), and CCC 94 days (prior year 80 days, +14 days) indicates deterioration in working capital efficiency.
Investment Efficiency: Total asset turnover 0.18x (annualized) roughly in line with prior year. Notes and accounts receivable ¥31.1B (prior year ¥34.0B) decreased, inventories ¥23.3B (prior year ¥21.2B) increased, indicating shifts in asset composition.
Financial Soundness: Equity Ratio 72.1% (prior year 72.6%) remains high. Cash and deposits ¥236.3B (prior year ¥233.6B), interest-bearing debt ¥70.3B (short-term borrowings ¥56.8B, long-term borrowings ¥13.4B) put the company close to a net cash position. Debt/Equity ratio 0.09x, current ratio 371% indicating ample liquidity. Short-term borrowings increased from ¥21.9B to ¥56.8B (+159%), suggesting increased working capital demand, but interest coverage exceeds 120x, so interest burden is minimal.
Individual data for Operating Cash Flow, Investing Cash Flow, and Financing Cash Flow are not disclosed, but balance sheet movements were analyzed to infer cash trends. Cash and deposits were ¥236.3B, up ¥2.7B from ¥233.6B a year earlier. Short-term borrowings rose to ¥56.8B from ¥21.9B (+¥34.9B, +159%), indicating increased working capital demand. Accounts payable decreased to ¥9.7B from ¥14.3B (-¥4.6B, -32%), affecting timing of cash outflows via changes in payment terms or procurement compression. Inventories increased to ¥23.3B from ¥21.2B (+¥2.1B), consistent with longer inventory turnover (+6 days). Receivables improved to ¥31.1B from ¥34.0B (-¥2.9B), indicating steady collections. Retained earnings increased to ¥504.1B from ¥499.9B (+¥4.2B), showing continued internal reserve accumulation. The company appears to have maintained cash by raising short-term borrowings while allocating part of profit and increased inventories to working capital. With a current ratio of 371% and cash/short-term borrowings of 4.2x, liquidity is sufficient, but short-term debt ratio 80.9% indicates heightened refinancing dependence.
Ordinary Income of ¥28.5B is an incremental ¥1.6B (+5.9%) over Operating Income ¥26.9B; stable non-operating income ¥1.9B (equity in earnings of affiliates ¥0.5B, interest income ¥0.6B, foreign exchange gains ¥0.3B, etc.) contributed. Non-operating expenses ¥0.4B are minor, reflecting recurring income structure. Extraordinary income ¥0.5B (including gain on sales of investment securities ¥3.1B) and extraordinary losses ¥0.4B (loss on disposal of fixed assets ¥0.4B) largely offset, so one-off effects were limited. Profit before tax ¥28.6B less corporate taxes ¥8.9B (effective tax rate 31.1%) resulted in Net income attributable to owners of parent ¥19.3B. Comprehensive income ¥23.1B exceeded Net income ¥19.7B (including non-controlling interests) by ¥3.4B, mainly due to foreign currency translation adjustments +¥4.5B. Unrealized gains/losses on securities -¥0.6B and actuarial gains/losses -¥0.5B were small negatives; divergence between comprehensive income and net income is limited and the quality of earnings is stable. Non-operating and extraordinary items did not materially distort Operating Income, supporting persistence of core profitability.
Full-year plan: Revenue ¥750.0B (YoY -1.7%), Operating Income ¥42.0B (+2.2%), Ordinary Income ¥48.0B (-3.1%), Net income attributable to owners of parent ¥39.0B, EPS ¥171.15. Q1 progress rates vs plan: Revenue 26.9% (Q1 benchmark 25%), Operating Income 64.1%, Ordinary Income 59.4%, Net Income 49.5%, indicating substantial front-loading on profit metrics. This is primarily driven by high-margin progress in Disaster Prevention & Infrastructure, but the full-year achievement assumes Environmental & Energy and International Businesses recover in H2. Full-year Operating margin 5.6% (Q1 actual 13.3%), full-year Net margin 5.2% (Q1 actual 9.6%), reflecting a conservative plan that assumes lower H2 margins. Forecast EPS ¥171.15 and dividend forecast ¥55 imply a Payout Ratio of approximately 32%. No revisions to earnings or dividend forecasts were made at Q1, leaving room for upward revision given strong H1 performance.
Full-year dividend forecast is ¥55 per share, up ¥12 (+27.9%) from prior year ¥43. Dividend payout ratio against forecast EPS ¥171.15 is about 32%, a healthy level. No interim dividend was paid at Q1; a year-end lump-sum dividend is assumed. Based on issued shares 24,322 thousand less treasury shares 1,534 thousand, the outstanding share base is 22,788 thousand shares, giving an estimated total dividend of approximately ¥1.25B. Given cash and deposits ¥236.3B, Net income attributable to owners of parent ¥19.3B (Q1) and full-year forecast ¥39.0B, dividend funding is sufficiently covered. No share buyback was disclosed; shareholder returns are dividend-centric. The increase from ¥43 to ¥55 per share (+27.9%) reflects strengthened shareholder return policy supported by profit recovery expectations and accumulated retained earnings (Retained Earnings ¥504.1B). A 32% payout ratio balances sustainability and growth investment.
Segment mix deterioration risk: Environmental & Energy Operating margin plunged from 23.0% to 10.2% (-12.8pt), and International Business posted an operating loss of -¥4.3B, widening the deficit. Disaster Prevention & Infrastructure accounts for about 90% of consolidated Operating Income; delayed recovery in other segments could impair full-year targets and margin sustainability. Urgent priorities are restoring Environmental & Energy project profitability and reducing International Business losses.
Working capital expansion and cash conversion risk: Inventory turnover days worsened from 60 to 66 (+6 days) and CCC extended from 80 to 94 (+14 days). Short-term borrowings increased from ¥21.9B to ¥56.8B (+159%), and short-term debt ratio is 80.9%, increasing short-term funding dependence. Project delays or prolonged receivables could hamper cash conversion, potentially leading to additional borrowing or liquidity pressure.
Industry-specific policy/budget dependency risk: The Disaster Prevention & Infrastructure Business is sensitive to the timing of public investment and disaster-related budgets. Changes in government budget formulation, execution schedules, or presence/absence of large supplementary budgets can amplify swings in revenue and profit. Strong Q1 progress could be reversed depending on H2 order trends.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 13.3% | 6.2% (4.2%–17.2%) | +7.1pt |
| Net Margin | 9.8% | 2.8% (0.6%–11.9%) | +6.9pt |
Profitability materially exceeds industry median, with Operating and Net margins at the upper end.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -0.7% | 20.9% (12.5%–25.8%) | -21.6pt |
Revenue growth lags industry median by -21.6pt, trailing high-growth trends in IT & Communications.
※ Source: Company compilation
Increased concentration in Disaster Prevention & Infrastructure and front-loaded profit progress: Q1 Operating Income progress of 64.1% substantially exceeds the full-year plan, driven by improvement in Disaster Prevention & Infrastructure Operating margin to 24.3% (prior year 17.7%). The fact that this segment accounts for ~90% of consolidated Operating Income leaves upside to full-year results, but delayed recovery in other segments presents downside risk for H2. Sustainability of public investment and disaster-prevention demand is key to full-year performance.
Deterioration in Environmental & Energy profitability and continued losses in International Business: Environmental & Energy Operating margin plunged from 23.0% to 10.2% (-12.8pt) and International Business posted an operating loss of -¥4.3B. Adverse segment mix reduced consolidated Operating margin by -1.7pt; turnarounds in these two segments are prerequisites for medium-term margin recovery. Monitoring improvements in project mix and margin management in H2 is critical.
Working capital expansion and higher reliance on short-term borrowings: Inventory days +6, CCC +14, and short-term borrowings +159% indicate concurrent funding expansion. Cash ¥236.3B and current ratio 371% ensure near-term liquidity, but short-term debt ratio 80.9% implies refinancing risk. Inventory reduction and stronger collections to improve cash conversion will support sustained financial health.
This report is an AI-generated earnings analysis created from XBRL financial statement data. It does not constitute an investment recommendation for any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.