1833.T

• Overall Interim Performance

  • Interim consolidated revenue and profit reached all-time highs, with increased revenue and growth across all profit levels compared to the prior year period, driven by solid performance from core construction businesses.
  • The 2025–2027 medium-term management plan got off to a smooth start in its first year (FY2025).

• Core Construction Business Operations

  • Both civil engineering and architectural construction segments benefited from additional work acquisition and consistent cost reduction, which lifted gross profit for both segments compared to the prior year.
  • Interim order intake: Civil engineering orders decreased 64.8 billion yen year-over-year due to an absence of multiple large 10 billion yen+ projects seen in the prior year; architectural construction orders increased 29.4 billion yen year-over-year, including large 1 billion yen+ project wins.

• Ishikari Bio Energy Update

  • Recovery and prevention work following the July 2024 power generation facility explosion is progressing on schedule.
  • The facility has completed trial operation and will next conduct pipe replacement work, with full commercial operation scheduled to resume in April 2026.

• Consolidated Financial Performance

  • Extraordinary net profit reached 1.7 billion yen, driven by a 1.7 billion yen gain on sales of investment securities from selling 5 listed stock holdings.
  • Cash flow from operating activities was a positive 18.5 billion yen; cash flow from investing activities was a negative 1.2 billion yen; cash flow from financing activities was a negative 21.3 billion yen.
  • Non-operating income improved 7.2 billion yen to a net positive 3.3 billion yen, driven by a swing from a 3.9 billion yen valuation loss to a 1.3 billion yen valuation gain on forward exchange contracts at Ishikari Bio Energy, an 1.1 billion yen gain from canceling unused forward contracts, and a swing from a 0.3 billion yen foreign exchange loss to a 0.4 billion yen foreign exchange gain.

• Full Year (FY2026 March) Consolidated Performance Guidance: Upward revision from the May 2025 forecast. Net sales increased 4.0 billion yen to 302.5 billion yen; gross profit increased 3.0 billion yen to 36.0 billion yen (gross margin lifted 0.8 percentage points to 11.9%); general and administrative expenses increased 0.8 billion yen to 23.0 billion yen; operating profit increased 2.2 billion yen to 13.0 billion yen; ordinary profit increased 2.5 billion yen to 15.2 billion yen; net income attributable to parent shareholders increased 1.0 billion yen to 12.3 billion yen.
• Volatile, uncertain items including foreign exchange gains/losses and valuation gains/losses on Ishikari Bio Energy's forward exchange contracts are not included in the full year guidance. Excluding these items, interim profit through the first half reached approximately 70% of the revised full year operating profit target. Management does not consider the guidance overly conservative, and will continue pursuing further earnings improvement via additional work acquisition and cost reduction.
• Order Intake Guidance: Civil engineering order guidance is maintained at the prior May forecast, still expecting a large decline versus FY2025 in line with carryover project and construction capacity considerations. Architectural construction order guidance is increased by 20.0 billion yen from the prior forecast.
• Dividend Guidance: Upward revision: full year dividend per share increased by 20 yen to 240 yen, with unchanged interim dividend of 110 yen and increased year-end dividend of 130 yen. The medium-term plan maintains the prior policy of a 70%+ consolidated payout ratio, excluding the volatile one-off forward contract valuation gains/losses from Ishikari Bio Energy in payout ratio calculations.

1. Civil Engineering (Civil Construction): No performance impact from large loss-generating specific projects seen in the prior year period. Operations were broadly solid, with improved profitability and higher cumulative profits from additional work on carryover projects and cost reduction initiatives. Full year guidance increased net sales by 4.0 billion yen and gross profit by 2.2 billion yen compared to the prior forecast.
2. Architectural Construction: Operations were broadly solid, with cumulative profit growth driven by additional work on carryover projects and cost reduction. Full year guidance increased gross profit by 1.0 billion yen compared to the prior forecast.
3. Investment Development & Other Businesses: Real estate and other existing businesses operated in line with plan with no major fluctuations. For the new business segment, subsidiary Ishikari Bio Energy saw lower revenue as it has not yet resumed full operations following a 2024 explosion, but the gross profit deficit narrowed due to lower depreciation after an impairment loss was booked in the prior period. Full year guidance expects a 0.2 billion yen decrease in gross profit for this segment, with a corresponding 0.2 billion yen improvement in intergroup profitability reclassified to the civil engineering segment for consolidated accounting purposes.

Consolidated aggregate interim results (September 2025): Operating profit increased 8.8 billion yen to 9.6 billion yen; ordinary profit increased 16.0 billion yen to 12.9 billion yen; net income attributable to parent shareholders increased 10.2 billion yen to 9.9 billion yen.

• A July 2024 explosion at the power generation facility of consolidated subsidiary Ishikari Bio Energy forced a prolonged shutdown, which continues to depress revenue for the new business segment as of the 2025 September interim period, though the deficit has narrowed.
• Foreign exchange rate fluctuations create large volatile swings in valuation gains/losses on forward exchange contracts held by Ishikari Bio Energy, which can have a material impact on consolidated non-operating results and net income attributable to parent shareholders. This volatility also creates uncertainty for dividend payouts if included in payout ratio calculations.
• Large, unforeseen losses on specific large-scale civil engineering projects can materially depress consolidated profits, as seen in the 2024 September interim period.

The provided earnings call transcript does not include a question and answer section.