Managing Officer and Director
In charge of Finance & Accounting and Investor Relations
Sustaining the increase of corporate value through cash allocations balanced between growth investments and shareholder returns.
Financial Results and Forecasts
In FY2025, consolidated net sales reached 2,057.8 billion yen, 5.8% up year on year. This growth was partly a result of steady performance in our domestic construction operations as well as the inclusion of two overseas subsidiaries that we recently acquired. Operating income reached 118.6 billion yen, up 67.1% year on year, a result of better profitability in our domestic architectural construction and among our construction subsidiaries in Japan and overseas. Net income totaled 126.6 billion yen, up 91.8%year on year due in part to special gains, namely, 88.1 billion yen in gain on sale of investment securities. Return on equity was 13.8%. These results for FY2025 exceeded the performance targets for FY2026 set out in the Mid-Term Business Plan. We believe this reflects the steady progress of our efforts to improve profitability and other initiatives.
Our forecasts for FY2026 are as follows. Net sales will reach 2,310.0 billion yen. Operating income will reach 153.0 billion yen, up 28.9% year on year, as our domestic building construction is on track to yield much higher profits on completed work. We also expect significant growth in ordinary income and net income. Ordinary income will reach 183.5 billion yen, up 50.0%year on year, accounting for the gain on negative goodwill associated with Seiwa Building Co., Ltd., becoming an equity method affiliate. Net income will reach 165.5 billion yen, a 30.7% gain year on year.
To Further Increase Our Corporate Value
Public investment will remain brisk for the industry, with further construction programs for disaster preparedness, mitigation, and national resilience. There are also causes for concern: geopolitical uncertainties threaten to dampen private capital investment, construction costs continue to rise, and the labor pool grows ever smaller. In order to increase our corporate value over the medium and long term against this backdrop, we need to strike the right balance between returning profits to shareholders and reinvesting in projects to sustain our growth.
Regarding growth investments, we will actively pursue opportunities for future growth, including M&A, real-estate, talent investment, digital transformation(DX), and R&D projects, all while maintaining financial discipline. For directors and executive officers, we have introduced the medium-term performance-linked share-based compensation to further incentivize eligible executives. The program is designed to strengthen management’s commitment to improving performance while aligning the interests of executives with those of shareholders through the sharing of risks and rewards associated with share price fluctuations. Alongside these initiatives, we will maintain close dialogue with investors, shareholders, and other stakeholders through our IR/SR activities.
We aim to continue increasing corporate value though our initiatives,“improve profitability,” “improve capital efficiency,” “investing for growth,” and “enhance shareholder return.”
- Period of the next Mid-Term Business Plan
- The consolidated dividend payout ratio that excludes ¥5.9 billion of gain on negative goodwill is 40.5%
Policies to Increase Corporate Value
1 Improve Profitability
Under the Mid-Term Business Plan (2024–2026), we have set a target of 100 billion yen in consolidated operating income for fiscal year 2026, and we currently expect to exceed that target. In the construction business, we will continue to accurately identify attractive market opportunities and strengthen our ability to respond to them. At the same time, we will rigorously prioritize profitability in our project selection and bidding decisions, building on improvements in project profitability at the contract acquisition stage. Furthermore, we will continue to transform our construction processes to enhance quality, reduce costs, and improve project execution and progress management, thereby driving sustainable profitability improvements.
2 Improve Capital Efficiency
To achieve our target of reducing securities holdings (to 20% or less of consolidated net assets by the end of March 2026, and to 10% or less by the end of March 2027), we sold 39 stocks with a total value of 109.1 billion yen in fiscal year 2025. Partly due to rising stock prices, as of the end of March 2026, the ratio of the remaining securities holdings to consolidated net assets stood at 24.4%, representing only a slight decrease from the end of the previous fiscal year; however, if we exclude from the balance those stocks for which we have reached an agreement with counterparties regarding their sale, the ratio is 9.1%. Furthermore, given the increasing uncertainty in the business environment—including the situation in the Middle East—we have decided, after having consultations with our business partners, to carry out the sale of certain stocks over the fiscal years 2027–2028.
3 Investing for Growth
Regarding investing for growth, as of the end of March 2026, the performance results were 235.0 billion yen, compared to the target of 360.0 billion yen set in the Mid-Term Business Plan 〈2024–2026〉. Note that investments in M&A and other items not included in the separate category totaled 324.8 billion yen. Going forward, we will continue to increase operating cash flows through the steady advancement of our business operations, while also continuing to sell rental properties and reduce our securities holdings, and allocate the resulting cash to investments aimed at sustainable growth.
4 Enhance Shareholder Return
Our basic policy is to strengthen our financial position—the foundation of our long-term growth—and to provide stable dividends. We have set a minimum dividend of 20 yen per share and aim for shareholder returns based on a consolidated dividends payout ratio of 40%. For fiscal year 2025, the dividends per share increased by 34 yen from the previous fiscal year to 72 yen. Additionally, the total payout ratio, including the share buyback of 10 billion yen in treasury stock, was 46.5%. We will continue to implement proactive shareholder returns.
- The consolidated dividend payout ratio, excluding the 5.9 billion yen negative goodwill gain, is 40.5%
- The consolidated dividend payout ratio, excluding the 35.5 billion yen equivalent to negative goodwill, is 40.2%
