SEMBA CORPORATION Q4 FY2024 earnings call

• 2024 Full Year Financial Performance

  • Total revenue: 28.956 billion yen, 16% year-over-year growth, driven by broad-based segment expansion and large project wins in priority focus areas
  • Gross profit: 5.755 billion yen (127.7% year-over-year), gross margin improved 1.8pp to 19.9%, driven by margin expansion from revenue growth, higher value-added offerings, ongoing construction cost reduction and DX-fueled productivity gains
  • Operating profit: 1.918 billion yen, net profit attributable to parent shareholders: 1.499 billion yen, with significant year-over-year profit growth
  • Ending order backlog: 6.532 billion yen, up 644 million yen year-over-year; all segments outside Large Store/Mixed-Use Commercial Facilities grew backlog (the large segment saw a decline after recording a major project sale at year-end)
  • Strong balance sheet: Total assets of 23.32 billion yen, equity ratio of 58%, cash and cash equivalents increased 3.936 billion yen to 11.949 billion yen

• Mid-Term Management Plan 2024 (Final Year 2024) Retrospective

  • Delivered consistent annual revenue and profit growth over the 3-year plan, exceeded planned dividend payouts each year, and achieved all core performance targets
  • 2024 full year dividend: 70 yen per share (60 yen regular + 10 yen special dividend) to reward shareholder support
  • Unmet targets from the plan will leverage accumulated research, analysis and execution know-how for the new medium-term plan

• Notable Completed Projects

  • Co-hosted ETHICAL DESIGN WEEK 2024 with Hakuten, providing ethical design insights to attendees
  • Led overall construction management, design and construction for 4 floors of the Gran Hamakura retail building in Shinbashi
  • Delivered interior design and planning for common signage, food hall, and spa facilities at the large-scale Nagasaki Stadium City mixed-use development
  • Completed design support and construction for Mitsui Chemicals' co-creation space Creation Palette YAE at Tokyo Midtown Yaesu, delivering high-quality complex curved construction via BIM technology

• Mid-Term Management Plan 2027 (2025-2027) Strategic Direction

  • Slogan: Create More Fun and More Fans!, focused on building stakeholder support and expanding business by growing the company's fan base
  • Five core priority themes: 1) Develop and acquire talent to build the future; 2) Build a fan base for a "Good Ethical Company"; 3) Expand service areas and improve delivered value; 4) Build a supply chain to support sustainable growth; 5) Deepen penetration in global markets
  • Executive management will directly lead all initiatives for fast delivery, and will pursue growth investment including M&A to accelerate expansion

By Market Segment

All market segments achieved year-over-year revenue growth: the Focus Segment grew 29.7%, with particularly strong demand for Office & Showroom projects. The Large Store & Mixed-Use Commercial Facilities segment saw solid order intake centered on renovation projects, even with few new store openings.

By Geography

• Domestic Japan: Revenue of 25.399 billion yen, representing 87.7% of total revenue, with 24.5% year-over-year growth driven by increased customer investment demand
• Overseas: Revenue of 3.557 billion yen, representing 12.3% of total revenue. Performance was challenged by stagnant market conditions across most regions; even Taiwan, which accounts for the majority of overseas revenue, failed to reach prior year revenue levels despite continued large project orders

• Medium-Term Financial Targets (Final Year: December 2027 Period)
  • Target revenue: 40 billion yen, operating profit: 2.5 billion yen, net profit: 1.7 billion yen
• Shareholder Return Guidance
  • For 2025-2027, target a payout ratio of 50% or higher to deliver consistent shareholder returns
• Capital Cost and ROE Guidance
  • Semba estimates its current cost of capital is approximately 5.2%. It has maintained a historical ROE of around 10% excluding the COVID-19 period, and targets a 10% or higher ROE for 2025-2027, with a focus on improving profitability and evaluating investment return for all growth projects
• Order intake for 2025 is expected to remain on a solid growth trajectory

• Overseas operations face ongoing headwinds from stagnant market conditions in many regions, with most geographies struggling to secure new orders and Taiwan (Semba's largest overseas market) failing to reach prior year revenue levels
• Some performance targets from the previous Mid-Term Management Plan 2024 were not achieved, though management noted accumulated operational knowledge will be carried forward to the new plan

No Question and Answer section was included in the provided transcript.