1905.T

Business & Organizational Updates

• Restructured the organization in June 2025 to integrate sales and construction teams under the three new segment headquarters (Capital Region, Pile, Regional), improving communication, goal alignment, work consistency, and driving profitability improvements
• Implemented new shared KPIs across all projects and the company, with safety and quality management prioritized as core foundational priorities
• The 3-year average gross profit margin trend is steadily increasing, showing stable profitability improvement even amid rising input costs, as the company has successfully passed through cost increases to clients

New Construction Method Development

• Completed the company's construction method lineup: Tenocube for shallow ground layers, traditional Tenocolumn for medium-depth layers, and the newly developed CP-X method for deep support layers
• The full lineup has increased customer inquiries, with a secondary boost in inquiries for the steel pipe TN-X method, creating new growth opportunities

International Expansion (Vietnam)

• Vietnam subsidiary is performing strongly, benefiting from a post-COVID construction boom driven by growing automotive manufacturing and retail expansion (e.g., AEON's 100-store plan)
• Acquired a construction business in the prior period as part of the goal to build a full end-to-end value chain (design, manufacturing, construction, sales) in Vietnam
• Acquisition of a concrete pile manufacturing plant in Vietnam is in final negotiations, with transfer expected next fiscal year and expected contribution to next year's earnings

Climate Action & Sustainability

• Environmental stewardship is a core company value rooted in its founding mission to develop low-pollution construction methods
• Implemented measures including electric pile drivers, alternative fuels, electric-furnace steel pipe, and low-CO2 blast-furnace slag cement, delivering 500 tons of CO2 reductions to date
• As of the latest reporting period, compared to 2022 levels, the company has cut 661 tons of CO2 for Scope 1/2 and 25,987 tons for Scope 3, against 2030 targets of 2,000 tons (Scope 1/2) and 60,000 tons (Scope 3)

Cash Allocation & Human Capital Investment

• The mid-term plan allocates ~7 billion yen in total capital (3.3 billion yen from 2023 year-end cash reserves, 3.8-4 billion yen from expected 3-year operating cash flow) to dividends, existing business investment, and growth sector investment
• Progress to date: 42.1% complete for existing business investment (1.26 billion yen spent), 34% complete for growth sector investment (1.02 billion yen spent including the pending Vietnam plant acquisition), 52.2% complete for dividends (0.52 billion yen spent), with overall progress on track
• Approved headquarter relocation to improve employee safety and working conditions, as part of human capital investment
• Conducts regular training, with focused training over the past 2-3 years for senior managers (GM level) and executives to upgrade skills and improve governance

Shareholder Return

• Maintains a policy of 2% or higher dividend on equity (DOE); for the current fiscal year, plans a 52 yen per share dividend, equal to 2.6% DOE and ~53% payout ratio

• Full year consolidated revenue guidance was revised downward from 23.5 billion yen to 21.5 billion yen, due to project delays for the Hokkaido Shinkansen and delayed order intake for the new CP-X construction method (caused by longer-than-expected design timelines for larger-than-anticipated projects), which cannot be recovered in the current fiscal year
• Full year net income attributable to parent shareholders is maintained at the original forecast of 650 million yen, with earnings per share unchanged at 97.89 yen, due to continued strong profitability performance
• Dividend guidance is maintained unchanged, with no revision to the planned full year dividend
• Management expects Chuo Shinkansen (Linear) project-related revenue to begin adding to results starting next fiscal year
• The Vietnam concrete pile plant acquisition is expected to begin contributing to earnings starting next fiscal year

Tenox operates three product/regional segments: 1) Capital Region Business Headquarters: Focused on the Tokyo metropolitan area (the company's core market) as a sales-focused segment; no separate absolute financial figures or revenue contribution percentages were provided in the transcript. 2) Pile Business Headquarters: Specialized in pile construction, as the company's core specialty of ground improvement and pile work; no separate absolute financial figures or revenue contribution percentages were provided. 3) Regional Business Headquarters: Covers all of Japan outside the capital region; no separate absolute financial figures or revenue contribution percentages were provided. Aggregate consolidated results for the first half of the fiscal year: Reported gross profit margin of 19.3% (17.4% excluding transitory items), up from 13.6% year-over-year. Consolidated revenue was 3 billion yen lower year-over-year, driven by the peak completion of the Hokkaido Shinkansen project.

• So-called "Trump risk" (trade policy uncertainty related to the former US President's policies) is identified as a source of uncertainty, though no material impact has been seen to date
• Industry-wide labor shortages and overtime regulations have pushed back construction schedules for above-ground structures, contributing to lower cement demand despite strong demand for foundation concrete piles
• Growth sector investment progress is slightly behind plan at 34% complete, though management expects it to catch up and does not see material cause for concern
• CO2 reduction results are sensitive to total revenue and construction volume, requiring continued vigilance to meet long-term targets
• Order intake for the new CP-X method was delayed due to longer design timelines for larger-than-expected projects, contributing to the full year revenue downward revision

The provided transcript does not include a question and answer section, so no key exchanges can be summarized.