GECOSS (9991) FY2026 FY Earnings Report

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Executive Summary

The fiscal year ended March 2026 was characterized by higher revenue and higher profits, with profitability improving substantially as profit growth significantly outpaced revenue growth. Revenue was ¥1,156.8B (+3.7% YoY), Operating Income was ¥80.1B (+16.9%), Ordinary Income was ¥87.1B (+28.2%), and Net Income (consolidated net income for the period) was ¥59.6B (+31.2%). In addition to operating leverage driven by an improved gross profit margin, non-operating and extraordinary factors—including a reversal in equity-method investment gains (losses) and a gain on negative goodwill—boosted Ordinary Income and Net Income.

Factors Affecting Business Performance

【Revenue】Revenue increased 3.7% YoY to ¥1,156.8B. The core Heavy Temporary Structures Business, which accounted for 88.3% of the revenue mix, achieved revenue growth of +4.0%, while the Construction Machinery Business grew +1.4%, resulting in higher revenue in both businesses.

【Profit and Loss】Operating Income was ¥80.1B (+16.9%), and Ordinary Income was ¥87.1B (+28.2%). The gross profit margin improved to 22.9% (+approximately 2.0pt YoY), resulting in a profit growth rate exceeding the revenue growth rate. Meanwhile, SG&A expenses increased 12.1% YoY to ¥184.5B, expanding at a pace exceeding revenue growth. The ¥7.0B difference between Ordinary Income and Operating Income was supported by non-operating income and expenses, including a foreign exchange gain of ¥2.0B, dividend income of ¥1.5B, and an equity-method investment gain of ¥2.1B (a loss in the previous year). Extraordinary income of ¥6.2B (a ¥4.0B gain on negative goodwill and a ¥2.2B gain on sales of investment securities) and extraordinary losses of ¥4.2B were recorded, limiting their contribution to Net Income. Overall, the Company achieved higher revenue and higher profits, with operating leverage from the improved gross profit margin and the uplift from non-operating and extraordinary factors supporting profit growth.

Segment Analysis

The Heavy Temporary Structures Business led consolidated performance, with revenue of ¥1,021.2B (+4.0%), segment profit (on an Ordinary Income basis) of ¥86.0B (+29.8%), and a profit margin of 8.4%. The Construction Machinery Business generated revenue of ¥135.6B (+1.4%), segment profit of ¥3.9B (+20.3%), and a profit margin of 2.9%. The profit margin gap between the two businesses was 5.5pt, indicating that consolidated profitability is highly sensitive to utilization rates, rental unit prices, and project mix in the Heavy Temporary Structures Business. In the Heavy Temporary Structures Business, the consolidation of FUCHI Pte. Ltd. as a subsidiary resulted in the recognition of a ¥4.0B gain on negative goodwill; however, this was treated as extraordinary income and was not included in segment profit.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 6.9% from 6.1% in the previous year, while the Net Income margin increased to 5.1% from 4.1% in the previous year. ROE was 7.9%. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥106.6B, approximately 1.8 times consolidated Net Income, indicating strong cash conversion. Decreases in inventories and trade receivables contributed to OCF, while a decrease in trade payables was a negative factor. 【Investment Efficiency】Investing Cash Flow was -¥20.7B, securing positive Free Cash Flow of ¥85.9B. 【Financial Soundness】The Equity Ratio was 61.8%, and the capital base was strong, with net assets of ¥756.8B against total assets of ¥1,225.4B. Against cash and deposits of ¥106.1B, interest-bearing debt was limited, resulting in a financial structure that is effectively in a net cash position.

Cash Flow Analysis

OCF increased 21.4% YoY to ¥106.6B, supported by higher Net Income and improved working capital. A ¥29.8B decrease in trade receivables and contract assets and a ¥9.4B decrease in inventories had a positive impact, while a ¥41.2B decrease in trade payables was a negative factor. Investing Cash Flow was -¥20.7B, consisting primarily of expenditures on capital investments and purchases of intangible assets, and was more contained than the burden in the previous year. Financing Cash Flow was -¥12.4B, reflecting dividend payments of ¥19.9B alongside the receipt of ¥15.8B in payments from non-controlling shareholders. Positive Free Cash Flow of ¥85.9B was secured, demonstrating financial capacity for dividends and investments.

Earnings Quality

The increase in profit for the current period was primarily driven by a recurring factor—improved gross profit margins at the operating level—but temporary factors also made a meaningful contribution to the increases in Ordinary Income and Net Income. Non-operating income of ¥8.1B included a foreign exchange gain of ¥2.0B and dividend income of ¥1.5B, while equity-method investment gains (losses) reversed from a ¥2.2B loss in the previous year to a ¥2.1B gain in the current period. Of extraordinary income of ¥6.2B, the ¥4.0B gain on negative goodwill arising from the consolidation of FUCHI Pte. Ltd. as a subsidiary was a temporary factor, as was the ¥2.2B gain on sales of investment securities. Extraordinary losses of ¥4.2B were recorded, leaving the net contribution of extraordinary gains and losses at approximately ¥2.0B to pretax income. Comprehensive Income was ¥81.3B, exceeding consolidated Net Income, with a ¥9.7B valuation difference on securities and an ¥8.4B adjustment related to retirement benefits providing additional contributions. The fact that OCF was generated at a level exceeding Net Income demonstrates cash support for earnings; however, the level of trade receivables and contract assets and the composition of work in progress require ongoing monitoring.

Earnings Forecast and Guidance

Full-year actual results represented progress of 100.6% for Revenue, 95.4% for Operating Income, and 101.3% for Ordinary Income against the Company’s forecasts. Revenue slightly exceeded the forecast of ¥1,150.0B, while Operating Income fell short at ¥80.1B versus the forecast of ¥84.0B. Conversely, Ordinary Income exceeded the forecast of ¥86.0B at ¥87.1B, as non-operating factors such as foreign exchange gains and the reversal in equity-method investment gains (losses) offset the shortfall at the operating level. Actual EPS of ¥173.96 exceeded the forecast of ¥169.41. The forecast dividend of ¥69.00 was in line with the actual dividend.

Shareholder Returns

The annual dividend was ¥69.00 per share (interim dividend of ¥25.00 and year-end dividend of ¥44.00), up from approximately ¥45.00 in the previous year. The Payout Ratio (the ratio of total dividends to consolidated Net Income for the period) was 39.7%, which does not represent an excessive burden in light of the Company’s capital and cash levels. Total dividends were ¥23.3B, representing a high level of coverage by Free Cash Flow of ¥85.9B; dividends were also substantially covered by OCF alone. No share buybacks were conducted during the period, and the Total Return Ratio was not calculated. The forecast dividend of ¥69.00 was in line with the actual dividend, and cash flow support for maintaining the current dividend level has been secured.

Risk Factors

1. Business concentration risk: The Heavy Temporary Structures Business accounts for 88.3% of revenue, creating a structure in which fluctuations in public investment, private-sector construction order volumes, utilization rates, and rental unit prices can have a significant impact on consolidated performance.

2. Working capital and project management risk: The levels of trade receivables, contract assets, and work in progress are susceptible to the effects of construction progress, timing of acceptance inspections, and cost management. Although their decrease contributed to CF in the current period, future fluctuations require close monitoring.

3. M&A integration and recurrence risk of temporary factors: The ¥4.0B gain on negative goodwill arising from the consolidation of FUCHI Pte. Ltd. as a subsidiary contributed to extraordinary income in the current period. Similar temporary factors may not arise from the following period onward, which should be considered when assessing the sustainability of growth in Ordinary Income and Net Income.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Profitability is clearly above the industry median.

Growth and Capital Efficiency

The Revenue growth rate is slightly below the industry median, indicating an advantage in profitability rather than growth.

※Source: Compiled by the Company

Key Points from the Financial Results

1. The gross profit margin improved from the previous year, and the Operating Income growth rate (+16.9%) exceeded the Revenue growth rate (+3.7%), confirming improved business profitability. Meanwhile, SG&A expenses increased at a pace exceeding revenue growth, making fixed-cost management a key focus for maintaining profit margins going forward.

2. OCF was generated at a level exceeding Net Income, and positive Free Cash Flow of ¥85.9B was secured. Cash and deposits were substantial, and the capital base remained stable, with an Equity Ratio of 61.8%.

3. Growth in Ordinary Income and Net Income benefited from temporary and non-recurring factors, such as the gain on negative goodwill and the reversal in equity-method investment gains (losses). In evaluating performance from the following period onward, separating these factors from profitability trends at the operating level will be an important focus.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,986–¥2,100 for a ±1% change in the cost of equity, and ¥2,039–¥2,043 for a ±0.1 change in ω.

Notes:

• Amortization of goodwill of ¥3.8 per share is added back to earnings (to account for a non-cash expense and comparability with IFRS companies).
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.

（Valuation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, nor does it predict or guarantee the future share price.）

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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