1975.T

• Financial & Capital Strategy:

  • Balances capital efficiency improvement and financial soundness; ROE exceeded 15% in FY2025 March term, far exceeding the cost of equity, and is projected to reach 15.8% for FY2026 March term, greatly exceeding the 18th Mid-term Management Plan's 8% target.
  • Reduces cross-holdings to bring the ratio of policy-held shares to net assets below 20% by the end of FY2026 March term; as of end-March 2025, the ratio had fallen to 23.4%.
  • Targets a consolidated payout ratio of 40% or higher; maintained the base dividend (excluding 20 yen 100th anniversary special dividend) for FY2026 March term. Two stock splits in 2022 and 2024 expanded the investor base and improved liquidity.

• 18th Mid-term Management Plan Progress:

  • All targets (orders, net sales, operating profit) are on track to be exceeded, with operating profit projected to beat the target significantly for the third consecutive year of record-high profit, driven by improved bid pricing, higher productivity, and strict cost control. The next mid-term plan will be announced in May 2026.

• Business Strategy:

  • Focuses on proposal-based sales for high value-added, high-margin production environment facilities (e.g., semiconductor factories, data centers), targeting large project order growth through custom design and construction.
  • Provides 21-month comprehensive training for new technical hires to accelerate early contribution of young employees.
  • Improves construction efficiency via digital tools (tablets, automatic marking machines, 3D scanners) and off-site prefabrication; model sites have achieved 17% man-hour reduction, with improved schedule leveling, shorter construction periods, and higher quality.

• Human Capital Strategy:

  • Increases hiring volume for three consecutive years, with 2025 hiring on track to hit 150% of target.
  • Introduced a 100-share restricted stock incentive for all employee stock ownership plan (ESOP) participants for the 100th anniversary, on top of the existing 20% matching contribution; ESOP participation rate exceeds 96%, far above the TSE corporate average, improving employee engagement.
  • Has raised average wages by ~5% for three consecutive years starting 2023, and increased new graduate starting salaries to improve employee satisfaction and motivation.

• Innovation & R&D:

  • Completed the new Tsukuba Technical Research Institute, a net-zero energy building with 6-star BELS certification and ZEB certification, focused on developing new environmental businesses. Main research areas are environmental control, energy saving, agriculture technology, and digital technology, with a goal of creating new businesses by integrating these fields.

• Sustainability & DX:

  • Has a target of net-zero greenhouse gas emissions by 2050, obtained SBTi certification in 2025, and installed solar panels at equipment manufacturing factories to cut emissions.
  • Develops the "ASAHI Workflow" system that uses BIM for end-to-end digital management of construction processes; currently validating the system at the Tsukuba institute site, with plans for full company rollout.

• Full-year FY2026 March term total orders received are projected to exceed FY2025 March term levels, supported by strong capital investment appetite in Japanese manufacturing, with both orders and net sales on track to reach 100 billion yen, marking the third consecutive year of record operating profit.
• For the Facility Construction Business, large order and sales growth is projected on the back of ongoing strong domestic capital investment.
• For the Equipment Manufacturing and Sales Business, full-year orders are projected to decline due to the pull-forward effect of large FY2025 dryer orders, while full-year sales are projected to remain flat with FY2025 levels.
• Management expects abundant order opportunities from large semiconductor factories, data centers, and research facilities to continue in the medium to long term.
• A new long-term vision, ASAHI-VISION 2050, has been launched, targeting an increase in the share of new business and overseas business to 26% of total net sales and a transformation of the company's business portfolio.
• The next mid-term management plan, focused on sustained growth, will be published in May 2026.

1. Facility Construction Business:

   • Orders received: 54.463 billion yen, +67.0% YoY, accounting for 96.6% of total group orders received.
   • Net sales: 38.881 billion yen, +2.9% YoY, accounting for 93.8% of total group net sales.
   • Operating profit: 4.159 billion yen, +40.6% YoY, driving overall group profit growth. By revenue, production environment facilities remain the largest segment, with growth in orders for distribution, lifestyle/cultural, and production environment facilities; sales increased in transportation/communication, business, and healthcare/medical environment facilities. Backlog for production environment facilities increased significantly due to focused acquisition of data center projects, maintaining a high overall backlog level of 104.366 billion yen for the group.

2. Equipment Manufacturing and Sales Business:

   • Orders received: 1.903 billion yen, -58.4% YoY, accounting for 3.4% of total group orders received.
   • Net sales: 2.560 billion yen, -5.7% YoY, accounting for 6.2% of total group net sales.
   • Operating loss: 68 million yen, showing gradual recovery. The year-over-year order decline is due to customer production plans concentrating orders in the second half, and large dryer orders from FY2025 March term will be recognized starting from FY2027 March term; sales of semiconductor manufacturing equipment-related products increased during the period.

• The ratio of policy-held shares to net assets rose to ~25% as of end-September 2025 from 23.4% at end-March 2025 due to market-driven stock price increases, creating near-term deviation from the 20% reduction target.
• Selling, general and administrative expenses increased year-over-year due to higher personnel costs from base pay raises and headcount expansion.
• The Equipment Manufacturing and Sales Business has recorded operating losses for two consecutive quarters, with ongoing profitability improvement efforts required.

Q: What has driven the 4.2 percentage point YoY increase in gross profit margin to 19.6%? / A: Management says the improvement comes from three main factors: the progress and completion of high-margin large construction projects in the first half, customer acceptance of price pass-through for higher raw material costs that improved bid profitability, and company-wide efforts to boost productivity and strengthen cost control. The company will continue working to maintain high margin levels going forward.

Q: What are the causes of the consecutive quarterly losses in the Equipment Manufacturing and Sales Business, and what is the outlook? / A: The main cause of recent losses is lower sales volume due to customer production planning delays. Demand and performance are now recovering gradually. The company is reforming the sales organization and accelerating development of high value-added eco-friendly products to improve profitability.

Q: Why did gross margin decline from Q1 to Q2, and will this downward trend continue? / A: The Q2 decline reflects the exceptionally large contribution of high-margin large projects to Q1 results that pushed the first quarter margin to an unusually high level. Q2 margin is still very strong compared to historical levels, and the company expects to maintain this high margin level for the rest of the fiscal year.

Q: What is the share price target for policy holding reduction, and what is the current progress? / A: As of September 2025, the ratio of policy-held shares to net assets stood at approximately 25%, up from 23.4% at the end of March 2025 due to broad market stock price gains. The company will continue to actively reduce holdings to hit the 20% target.