1780.T

Overall Financial Performance

• Total consolidated net sales for FY2025 March term were 35.613 billion yen, down 1.933 billion yen year-over-year, impacted by a pullback after the prior year's record performance from sell-out of completed inventory in the Tokyo metropolitan area condominium development business
• Operating profit was 3.891 billion yen (down 0.436 billion yen YoY), with an operating margin of 10.9% (down 0.6pp YoY); net income attributable to parent shareholders hit a new record high at 3.002 billion yen, up 0.026 billion yen YoY
• All key financial metrics remain at high levels; ROE declined to 13.7% due to increased net assets but still remains well above the 9% cost of equity

Prior Mid-Term Plan (FY2022-FY2024) Performance

• The plan outperformed initial targets, with upward revisions made after the first year; strong large project order growth, early DX adoption including BIM improved customer satisfaction and differentiated Yamaura from peers, absorbing raw material cost inflation and driving margin improvement
• Three core product brands (Eefact, Oishi尔德, Atworks) have delivered over 200% growth compared to FY2020 levels and are on track to meet long-term targets

New Mid-Term Plan 2025: Three Core Strategic Pillars

• Improvement Strategy: Address current organizational challenges by enabling flexible responses to priorities, clarifying roles between executives and headquarters, and strengthening core functions
• Differentiation Strategy: Strategically strengthen Yamaura's competitive advantages via new product development and maximizing cross-departmental synergy
• Aggressive Growth Strategy: Expand future revenue bases through partnerships, collaborations, M&A in high-growth areas, and advance CRE (Corporate Real Estate) solutions to maximize yield from client-held real estate

Key Growth Initiatives

• Promoted public-private partnerships: Started corporate recruitment for the Kitahotaka Industrial Park in Azumino, a 3.5 billion yen, 15-hectare development project, covering end-to-end services from land matching to development, design and construction; advance PFI projects for public facilities including post-construction operation and maintenance
• Launched CRE solutions: Help clients optimize real estate holdings to improve ROE/ROA and operational flexibility, covering services like portfolio optimization, unused land utilization, and strategic acquisition/repurposing of leased land
• Introduced NEBs, a comprehensive evaluation index for energy-efficient buildings: Quantifies non-energy co-benefits (BCP risk mitigation, carbon reduction, health/ productivity improvement, real estate value appreciation) that were not measured in traditional ZEB evaluation, shortening visible payback periods for energy efficiency investments and supporting better client decision-making

Capital Allocation and Shareholder Returns

• Yamaura plans to generate 15 billion yen in cumulative cash flow over the 3-year mid-term plan:
  • 2.3 billion yen for maintenance investment (BCP measures, existing facility upgrades)
  • 7.5 billion yen for growth investment (development real estate acquisition, M&A/partnership stakes, IT infrastructure, R&D, DX-related investment)
  • 4.1-4.4 billion yen for shareholder returns (dividends, share buybacks, shareholder benefits), maintaining a balanced allocation between growth and returns
• Updated shareholder return policy: Will maintain a minimum 2% DOE, conduct timely share repurchases and cancellations, pursue capital gains for shareholders, and maintain existing shareholder benefits; targets an ideal 60% equity ratio, and will use financial leverage to improve capital efficiency while maintaining a stable financial base
• Sets PBR improvement targets: Aims to reach a PBR of over 1.6x by increasing PER to 12x via execution of growth strategies and expansion of non-financial value through human capital management

Human Capital Strategy

• Current challenges include over-reliance on individual employees and communication gaps; targets an organizational structure that enables cross-functional collaboration, standardized/leveled workloads, and an engaging work environment
• Sets measurable KPIs for 3-year improvement: Increase per-employee training spend from 22,613 yen to 40,000 yen, per-employee training hours from 13.1 to 20, raise female manager ratio from 0.5% to 3.0%, increase gender-neutral parental leave take-up from 8.3% to 50%, raise average annual paid leave days from 11.7 to 14.0, and reduce turnover from 4.56% to 4.0%

• For FY2026 March term, Yamaura expects to return to growth and hit new all-time highs, forecasting net sales of 38.659 billion yen (+3.046 billion yen YoY), operating profit of 4.177 billion yen (+0.412 billion yen YoY), and net income attributable to parent shareholders of 3.137 billion yen (+0.135 billion yen YoY)
• The mid-term plan targets net sales of 41.3 billion yen by FY2027 (3-year outlook) and 45.0 billion yen by FY2030; corporate architecture remains the core business accounting for ~60% of sales, with planned growth across all business segments
• Strategic segment targets: Architecture will advance large community-focused development via pre-acquisition of land; Civil and Engineering will strengthen focus on renewable energy and disaster prevention projects
• 3-year mid-term target KPIs: Net income of 3.17 billion yen, employee count growth from 449 to 480, equity ratio reduction from 75.5% to 70.0%, ROE improvement from 13.7% to 14.0%, and DOE increase from 2.1% to 3.0%

Overall, all segments saw a year-over-year decline in order received and completed construction volume due to the pull-forward effect from the prior fiscal year's record high performance, but overall growth trajectory remains on track. Carry-over construction volume across all segments hit a new all-time high exceeding prior year levels:

• Architecture Segment: 27.8 billion yen in orders received, 25.528 billion yen in completed construction, 24.566 billion yen in carry-over construction
• Civil Engineering Segment: 2.698 billion yen in orders received, 3.108 billion yen in completed construction, 5.664 billion yen in carry-over construction
• Engineering Segment: 4.059 billion yen in orders received, 4.005 billion yen in completed construction, 4.861 billion yen in carry-over construction
• Development and Other Segments: 0.287 billion yen in both orders received and completed construction

• Shifts in U.S. tariff policy may lead to more cautious private sector capital investment, creating uncertainty for order forecasts and potentially resulting in a challenging operating environment

The question and answer section is not included in the provided transcript.