Overview of Operating Results, etc.
1. Overview of Operating Results for the Three Months Ended June 30, 2025
Although an agreement has been reached on the U.S. tariff hike, the Japanese economy may experience weaker capital investment due to a potential economic slowdown and a decline in corporate earnings. Risks such as exchange rate fluctuations and increasing interest rates persist, alongside rising demand for labor and price increases, leaving the outlook of the Japanese economy uncertain.

The business environment in which the Group operates remained challenging. This was due to the cost impact of rising prices of materials and equipment, and soaring labor costs, as well as chronic labor shortages, despite the expectations of brisk capital investment in decarbonized power sources amid the growing need for investment in decarbonization, and in power supply infrastructure to meet growing electricity demand, particularly from new data centers resulting from expanded use of generative AI.

In these circumstances, the Group drew up the FY2024 mid-term management plan (FY2024-FY2026) last year and is addressing key issues based on the basic policy of “creating a strong and flexible Q’d with people at the core.” Meanwhile, given the changes in the operating environment over the past year, we are placing a greater focus on the substation market, where construction of new and additional substation facilities is expected to grow alongside rising electricity demand, the nuclear power market, where construction activity is expected to increase in preparation for the resumption of nuclear power plant operations, and the hydroelectric power market, where brisk scrap-and-build (S&B) demand exists.

In April of this year, for instance, we set up the Substation Construction Department to increase our share in the market for new and additional substation facilities. In addition, as we leverage six branches rooted in each region, the number of construction bases is increasing nationwide. Going forward, we will intensify our efforts to assign personnel on a permanent basis to these locations.

Furthermore, with the aim to realize a carbon neutral society, in June this year we announced our plan to launch a biogas power generation business in Koshi City, Kumamoto Prefecture, using methane-fermentation gas derived mainly from wastewater sludge from food processing factories and sludge from sewage treatment plants, as well as food residue, in a bid to utilize industrial waste as renewable energy and contribute to the solution of regional issues.

As a result, total orders received were ¥18,442 million (up 31.1% year-on-year), owing mainly to the receiving of orders concerning installation of new and additional facilities for substations in response to electricity demand at data centers, air conditioning work at plants and public facilities, projects related to the decommissioning of the Fukushima Daiichi Nuclear Power Plant, implementation of safety measures at nuclear facilities, replacement of communication equipment, and sales of biomass fuel.

Net sales were ¥15,645 million (up 5.0% year-on-year), owing mainly to progress of projects related to the decommissioning of the Fukushima Daiichi Nuclear Power Plant, construction of storage battery-related plants, installation of new power generation facilities for chemical plants, maintenance and repair work for oil refineries, and air conditioning work and electrical work at public facilities, among others.

The amount carried forward to the next period was ¥124,218 million (up 28.3% year-on-year).

As for profits, operating profit was ¥552 million (compared to operating loss of ¥367 million for the same period of the previous fiscal year), as a result of our focus on selective order taking that emphasizes profitability in addition to increases in net sales. Ordinary profit was ¥461 million (up 76.0% year-on-year) mainly due to the recording of a loss on valuation of derivatives because of the impact of the yen’s appreciation on the outstanding balance of forward exchange contracts, which have been entered into in order to reduce the risk of exchange rate fluctuations related to fuel purchases. Profit attributable to owners of parent amounted to ¥771 million (up 8.2% year-on-year), reflecting a gain on sale of real estate for rent. They were sold in order to improve asset efficiency.

Business results by segment were as follows.

(Facilities Construction)
Total orders received and net sales were ¥16,969 million (up 35.2% year-on-year) and ¥14,243 million (up 6.0% year-on-year), respectively, due to increases in the Energy Division and the Nuclear Power Division.
Segment profit was ¥1,352 million (compared to segment loss of ¥68 million for the same period of the previous fiscal year).

(Other Businesses)
Total orders received were ¥1,473 million (down 1.6% year-on-year).
Net sales were ¥1,402 million (down 2.7% year-on-year).
Segment profit was ¥54 million (down 60.8% year-on-year).


2. Overview of Financial Position for the Three Months Ended June 30, 2025
Total assets amounted to ¥95,268 million as of June 30, 2025, a decrease of ¥12,813 million from the end of the previous fiscal year. This was mainly due to a decrease in notes receivable, accounts receivable from completed construction contracts and contract assets.

Total liabilities amounted to ¥26,495 million as of June 30, 2025, a decrease of ¥13,159 million from the end of the previous fiscal year. This was mainly due to a decrease in short-term borrowings.

Net assets amounted to ¥68,773 million as of June 30, 2025, an increase of ¥345 million from the end of the previous fiscal year. This was mainly due to an increase in valuation difference on available-for-sale securities.


3. Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information
The consolidated financial results forecast for the fiscal year ending March 31, 2026, announced on May 12, 2025, remains unchanged.