IBOKIN Co.,Ltd. Q4 FY2025 earnings call

• Overall Business Strategy

  • The company maintains its long-term strategy of leveraging three core businesses (demolition, environmental, metal) to deliver one-stop services. It positions the geographically unrestricted demolition business as its growth engine, and balances resource allocation to expand the geographic footprint of the environmental and metal businesses, which serve as a stable operating base.
  • The company categorizes demolition as a "hunting-type" business model, and environmental/metal as "farming-type" businesses that generate revenue and profit through consistent factory inflow. Scrap and waste generated from demolition projects are fed into the environmental and metal segments, and balanced growth across all three businesses stabilizes overall corporate performance.

• Demolition Business Strategic Priorities

  • The core themes are improving capacity to handle large projects and building greater market trust. Management expects continued growth in large project volume, so it will prioritize developing and accumulating specialized technology, continue advancing wind power plant demolition projects, and improve proposal and documentation capabilities to support growth in prime contracting work.
  • The company will restructure its organization to increase specialization and division of labor: it will clarify the previously blurred boundary between sales and construction functions to build out clear, separate teams aligned with organizational growth. It also plans to expand sales branches targeting major Japanese cities.
  • Mitsue was acquired as a subsidiary in January 2025, which has generated strong group-level synergies: it strengthened construction capacity within Hyogo Prefecture, added direct construction coverage to western nearby regions including Okayama and Fukuyama, enabled flexible deployment of large heavy equipment, and brought asbestos removal work in-house.
  • The company added a second ultra-large building demolition specialized machine in September 2025, which is larger and higher-performing than the first unit. It can be configured with a long arm to work on floors up to 50 meters high. The company now holds a 180-ton and 130-ton unit, and is developing new construction methods that use both machines simultaneously, with a goal to protect these as intellectual property. It also has trained 5 qualified ultra-large heavy equipment operators to support the new machine, and built out capacity to handle multiple large projects in parallel.
  • The company has launched a new service that calculates project-specific CO2 emissions, and provides feedback to customers, including calculation of CO2 reduction benefits from demolition waste recycling. It plans to customize and scale this service going forward.

• Environmental and Metal Business Strategic Priorities

  • The core themes are expanding the business geographic footprint and establishing a sales planning department. A sales planning department led by core members of the sales headquarters (led by Managing Director Matsubara as sales head) has already been established, and will be used to strengthen sales information collection and manage project progress more effectively.
  • The company is evaluating expanding sales locations similarly to the demolition business, and is actively pursuing new yard securing and M&A opportunities to support growth, given the factory-focused nature of these business lines. It will also continue strengthening its sales structure focused on securing demolition projects in the Kansai region.
  • The company has acquired a ~900 tsubo factory site in Suminoe Ward, Osaka, ~12-13 km from the existing Hanshin Facility in Amagasaki, with good highway access that enables 15-minute travel between the two sites, and a 10-minute travel time from subsidiary Kokutoku Industry in Sakai. The new plant, planned to open in 2027 fiscal year, will have the same functions as the existing Hanshin Facility, cover southern Osaka, and handle pre-processing steps in coordination with the Tatsuno City factory, with a combined total capacity target 3x the current Hanshin Facility volume.
  • For the demolition business, the company will expand the Tokyo and Osaka branches: it currently has ~10 staff at each branch, and plans to grow each to 20 staff as soon as possible. It is also evaluating opening new branches in other cities, which will start as small sales offices initially.

• Enabling Initiatives

  • The company will continue active investment in securing and training talent to support business expansion, and investment in advanced technology. It will advance environmental load visibility and reduction to meet client information needs: in addition to material balance metrics such as recycling rate, it will make CO2/carbon emission data visible and share it with clients as a core service offering, to drive the company's transition from a labor-intensive industry to a knowledge-intensive industry.

1. Demolition Business: Revenue increased 36.7% year-over-year to 3.461 billion yen, accounting for approximately 34.6% of total consolidated revenue. Mitsue was added to the group via acquisition and contributed to profit, and progress on large-scale demolition projects drove the revenue increase; however, higher-than-expected raw material and construction costs led to a decline in operating profit for the segment. 2. Environmental Business: Revenue decreased 3.4% year-over-year to 2.025 billion yen, accounting for approximately 20.2% of total consolidated revenue. While the volume of contracted industrial waste processing increased, weaker-than-expected recycled resource sales driven by lower year-over-year average iron scrap prices led to both lower revenue and lower profit for the segment. 3. Metal Business: Revenue decreased 10.1% year-over-year to 4.518 billion yen, accounting for approximately 45.2% of total consolidated revenue. Lower iron scrap prices driven by weak market conditions led to lower revenue; however, increased processing of old scrap generated by nearby large-scale demolition projects and rising non-ferrous metal prices led to an increase in profit for the segment. Total consolidated revenue for the full year 2025 was 10.005 billion yen, a 3.6% increase year-over-year.

• For the 2026 December full fiscal year, management expects consolidated revenue of 10.5 billion yen, a 4.9% increase year-over-year; operating profit of 0.8 billion yen, a 24.4% increase year-over-year; ordinary profit of 0.778 billion yen, a 17% increase year-over-year; and net income attributable to parent company shareholders of 0.524 billion yen, a 12.4% decrease year-over-year. Management expects gradual recovery in corporate production activity and facility renewal demand in 2026.
• For iron scrap prices: management expects medium-term price increases driven by the global shift to electric arc furnaces for decarbonization, but expects short-term upside to remain muted, and for prices to stay at current levels through 2026.
• For non-ferrous metal prices: after several years of rising trends, management expects prices to stabilize somewhat in 2026.
• For shareholder returns: management maintains an unchanged dividend per share forecast of 32 yen for the 2026 December fiscal year, matching the 2025 fiscal year dividend. The company's core dividend policy is to continue stable dividend payments to shareholders, while retaining sufficient internal reserves to support future business expansion and strengthen the company's financial position.

• For the demolition business segment, multiple large projects incurred higher-than-budgeted costs in 2025, driven by both external and internal factors: external constraints included all nearby industrial waste processors limiting acceptance of concrete rubble, which required transporting waste to distant sites and increased costs. Internal factors included strategic pricing to build relationships with large clients, new entry as prime contractor on high-difficulty large demolition projects that required compliance with unique on-site rules and strict safety standards (increasing costs), unexpected higher building solidity that increased costs for additional equipment, repairs, and fuel, and insufficient manpower to match rapid business growth, increasing project size, and growth in prime contracting work.

Q: Regarding the new plant in the Hanshin region: where exactly in Suminoe Ward will the new plant be located? It will have the same functions as the existing Hanshin Facility, but what specific equipment will be installed, and what is the target processing volume?

A: It is located near Minami-ko in Suminoe Ward, Osaka City. When combining the existing facility and the new plant, the company expects total processing capacity to be approximately 3 times the current processing volume of the existing Hanshin Facility. The company handles a wide mix of waste and scrap types, so providing a specific total volume in cubic meters or tons is difficult, but based on current capacity, it will be approximately 3 times the current volume of contracted work in the Hanshin region.

Q: Is the planned name for the new plant in Osaka Hanshin Daini Jisho (Hanshin Second Facility)?

A: At this point, the planned name is Hanshin Daini Kojo (Hanshin Second Plant).

Q: Can you share what main equipment will be installed at the new plant?

A: Equipment plans are still under development, but the company plans to install compression equipment and crushing equipment.

Q: Are you planning to install large equipment such as a press or guillotine shear?

A: It will more likely be crushing equipment; that is still under consideration, and there are multiple candidate options being evaluated in the context of the business model. The new plant has a smaller site, and large-scale equipment is already located at the Tatsuno factory, so the company is not planning to install large equipment like a full shredder. It is highly likely that the main equipment will be compression equipment and equipment for primary crushing.

Q: Does the existing Hanshin Facility already have similar equipment?

A: The existing facility has a press and a scrap shear.

Q: What type of scrap shear is it?

A: It is a Lavantie shear.