1888.T

Core Business & Mid-Term Strategy Progress

• Government civil engineering: Secured multiple large contracts for defense facilities, port infrastructure, river and highway projects. Won 4 disaster reconstruction contracts related to the Noto Peninsula earthquake, including the high-profile Wakura Port restoration project, a symbol of regional recovery.
• Government architecture: Won multiple large defense facility contracts and waste treatment facility projects in Fukuoka and Okayama prefectures. Secured early contractor involvement (ECI) engagements for the Dangiya District urban redevelopment project and base facility optimization work.
• Private sector civil engineering: Order intake for domestic private civil engineering grew 150.4% YoY driven by large-scale renewable energy projects. Secured contracts for onshore wind, solar, and small hydropower construction, with ongoing efforts to enter biomass and geothermal power segments. Will strengthen expansion into logistics and data center land development projects.
• Private sector architecture: Shifted project mix away from condominiums to focus on large-scale logistics warehouses, factories, and accommodation facilities. Implemented a new architectural division system, won projects in new regional markets (Hokkaido, Gunma, Okayama), and established a new in-house architectural design department in FY2025 to pursue design-build projects.
• Overseas business: Continues pursuing ODA projects focused on Asia and Oceania, with a target to secure multiple project awards in the current fiscal year. Exploring new opportunities in coastal African markets, and directly hired local technical staff in Sri Lanka and Indonesia to build local operational capacity.
• Real estate business: Continues investment in stable income-generating rental assets, and is progressing redevelopment and sale of existing holdings in Kitakyushu.

New Energy & Technology Development

• Joined the FLOWCON consortium to develop construction systems for rapid, cost-effective installation of floating offshore wind farms. A jointly owned special purpose vessel is scheduled to enter service in Japan in spring 2026, and is being marketed to domestic power generation companies.
• Completed manufacturing of equipment for the new "Wind Brain" onshore wind construction method, with training ongoing and pilot construction demonstration planned within the fiscal year. The method has already received strong inquiries from power developers.
• Advanced digital transformation (DX) for construction: Standardized remote site management systems for civil engineering, hired and trained in-house BIM/CIM specialists, and developed multiple AI-powered safety and efficiency tools, including the WIT 3rdEYE AI crane monitoring system and MAIRS general vessel collision avoidance system, both of which have received high industry acclaim.
• Ongoing R&D projects include underwater ROV for port structure inspection, automated caisson installation, and low-carbon algal reef base materials that cut CO2 emissions during manufacturing by over 90%, with offshore field testing planned for fall 2025.

Human Capital, Operational Reform & Sustainability

• Human resources: Established a new human resources development department to strengthen recruitment, with 2025 new hires increasing 85% YoY to 52 employees, and a 2026 target of 80 new hires. Implemented a regional limited employee制度 to support diverse work arrangements, and received recognition for healthy workplace practices and gender diversity (2nd stage eruboshi certification).
• Work style reform: Assigned dedicated operational support managers at head office and branch levels for civil engineering, cutting overtime to 1/3 of prior year levels. Committed to appropriate project scheduling, and promotes a full two-day weekend schedule for all new projects. Eliminated all bill payments, converting all supplier payments to cash to strengthen supply chain partnerships.
• Governance: Established a new Risk Management Department to strengthen proactive risk prevention and early detection, and conducts regular company-wide cybersecurity training.
• Sustainability: Achieved a CDP score of B and EcoVadis Bronze Medal recognition. As an Eco-First company, targets 90% employee Eco certification completion, with 188 employees passing in the first year. Is contributing to carbon neutrality through blue carbon ecosystem development via algal reef projects.

• For the FY2026 March term, Wakachiku Construction projects consolidated revenue of 100.6 billion yen, consolidated operating profit of 5.75 billion yen (5.7% projected operating margin), and net profit attributable to parent company shareholders of 3.7 billion yen, representing an increase in both revenue and profit compared to FY2025.
• Standalone segment guidance for FY2026: Civil engineering revenue of 66 billion yen with projected gross profit of 9.6 billion yen; architecture revenue of 31 billion yen with projected gross profit of 2.85 billion yen; real estate and other revenue of 1 billion yen with projected gross profit of 0.25 billion yen. Total standalone revenue is projected at 98 billion yen with total gross profit of 12.7 billion yen.
• For FY2025 March term dividends: The company plans to pay a 126 yen per share ordinary dividend, consistent with its shareholder return policy of a 3.6% DOE floor and 40%+ payout ratio, resulting in a 3.6% DOE and 45% payout ratio.
• For FY2026 March term: The company projects a 131 yen per share dividend, aligned with the 3.6% DOE target, resulting in a projected payout ratio of 46.3%.
• Management has reaffirmed its commitment to meeting the targets of the 2024-2026 mid-term management plan, with FY2026 positioned as a foundational year to deliver strong progress toward long-term 2030 vision goals.

For the standalone FY2025 March term: 1. Civil Engineering (Doboku): Revenue of 54.748 billion yen, contributing 65.5% of total standalone revenue. Revenue decreased 23.2% year-over-year, due to the absence of large-scale marine civil engineering projects that were completed in the prior year. Gross profit was 9.448 billion yen, a 23.7% YoY decrease, with gross margin remaining at a high level compared to historical performance. 2. Architecture (Kenchiku): Revenue of 27.485 billion yen, contributing 32.9% of total standalone revenue. Revenue increased 19.2% YoY, after slow progress in the first half of the year offset by strong performance in the second half. Gross profit was 2.196 billion yen with an 8% gross margin, as the impact of previous unprofitable projects was fully resolved. 3. Real Estate and Other: Revenue of 1.402 billion yen, contributing 1.6% of total standalone revenue. Revenue increased 34.8% YoY. Gross profit was 0.280 billion yen. Total standalone revenue across all segments was 83.636 billion yen, with total gross profit of 11.925 billion yen. Consolidated results for the full year: Consolidated revenue was 86.462 billion yen, operating profit of 5.22 billion yen, and net profit attributable to parent company shareholders of 3.69 billion yen. Total standalone order backlog increased 20% YoY to 121 billion yen, with both onshore civil engineering and architecture backlogs exceeding 50 billion yen each.

The company noted that the shift to larger-scale projects has increased the lead time between order award and construction start, leading to greater quarterly revenue volatility (seen in FY2025 with very low first half revenue followed by record high second half revenue). The company also acknowledged that international expansion into new markets (such as coastal Africa) carries unquantified project and country risks, which the firm is working to mitigate through careful pre-project assessment and local capacity building. No material operational failures or unexpected major risks were disclosed during the call.

No formal question and answer section was included in the provided transcript.