Overview of Operating Results, etc.
１．Operating Results for the Fiscal Year under Review
Although the upward trend of capital investment continued driven by buoyant corporate earnings, the outlook of the Japanese economy remained uncertain because of risks, including exchange rate fluctuations and increasing interest rates, among others, in addition to rising demand for labor and price increases.

The business environment in which the Group operates was extremely challenging. This is because of a gradual decrease in the volume of construction at conventional power stations, which has been the Company’s core business for many years, the cost impact of prices of materials and equipment, and soaring labor costs, as well as chronic labor shortages, despite the expectation of brisk capital investment in decarbonized power sources amid the growing need for investment in decarbonization.

In these circumstances, the Group has judged that it is important to pursue a business strategy of diversifying revenue streams by expanding our presence in the general industry and other market, as well as in the renewable energy related market, in view of the fact that our business has been overly dependent on the electric power market, and we launched the FY2024 mid-term management plan (FY2024-FY2026) in April 2024, which focuses on strengthening human capital.

Specifically, in accordance with the basic policy of “creatin g a strong and flexible Q’d with people at the core ,”we are addressing the following key issues: “strengthen human capital by investing in human “refine ‘Q’d’ so as to be chosen by customers , and “strengthen ties with all people and organizations involved in our company.”

Especially, in order to strengthen sales capabilities and competitiveness, we reorganized our operations by function, including sales, construction cost estimating, and construction, and established new branches that serve as sales bases rooted in each region. By integrating previously dispersed information, knowledge, and skills, we have improved efficiency in securing orders from new customers and fields, generating a steady flow of successful results. In a bid to further expand the order flow, we forged ahead with a variety of initiatives, such as early determination of specification through design support for customers, development of a construction cost estimation database incorporating the latest insights, enhanced procurement of materials and equipment by diversifying domestic and international procurement channels, and joint simulation of securing workers by sharing construction work information early with key partner businesses.

As a result, total orders received were ¥91,466 million (up 42.5% year-on-year), owing mainly to the receiving of orders concerning the installation of additional facilities and the upgrading of plants, maintenance and repair work for oil refineries, air conditioning work and electrical work at public facilities , construction and upgrading of waste incineration plants , repair work of public hydroelectric power plants, installation of new and additional facilities for substations in response to increasing electricity demand at data centers, new projects for decarbonization of thermal power plants through synergy with the components manufacturing business of an overseas subsidiary, preparation for resumption of operation of nuclear power plants , etc.

Meanwhile, net sales were 67,722 million (down 23.5% year-on-year), because the implementation of safety measures at nuclear power plants and construction of thermal and biomass power plants ran their course and projects related to treated water at the Fukushima Daiichi Nuclear Power Plan t were completed in the previous fiscal year, despite the progress of air conditioning work and electrical work at public facilities, solar power facilities for on-site power purchase agreements (PPA), implementation of business continuity planning (BCP)measures, work for recovery from torrential rain , commencement of the operation and maintenance (O&M)business for biomass power plants, installation of new and additional facilities for substations, etc.

The amount carried forward to the next period was ¥121,421 million (up 24.3% year-on-year).

As for profits, operating profit was ¥2,665 million (down 32.7% year-on-year), and ordinary profit was ¥3,342 million (down 35.9% year-on-year) due mainly to a de crease in net sales despite the recording of actuarial differences in cost reduction and retirement benefit accounting as decreases in cost of sales and selling, general and administrative expenses. Profit attributable to owners of parent amounted to ¥2,90 0 million (down 2.0% year-on- year), reflecting a gain on sale of investment securities. They were sold in order to improve asset efficiency.

Business results by segment were as follows.

(Facilities Construction)
Total orders received were 85,464 million (up 46.0% year-on-year) due to increase s in the Energy Division and the Nuclear Power Division.
Net sales were ¥61,672 million (down 25.7% year-on-year) due to decreases in the Energy Division and the Nuclear Power Division.
Segment profit was ¥4,180 million (down 58.2% year-on-year).

(Other Businesses)
Total orders received were ¥6,065 million (up 7.9% year-on-year).
Net sales were ¥6,112 million (up 12.8% year-on-year).
Segment profit was ¥113 million (compared to segment loss of \45 million for the previous fiscal year).


２．Future Prospects
The Group expects the business environment to remain challenging as the energy and infrastructure business in which it operates is exposed to the growing risk of an economic slowdown due to the U.S. government’s tariff policy, along with rising labor demand, increasing prices, exchange rate fluctuations, and increasing interest rates.

On the other hand, with the Japanese government’s cabinet decisions on the Seventh Strategic Energy Plan and the GX2040 Vision, it has been announced that electricity demand is expected to grow over the medium to long term in parallel with the progress of digital transformation (DX) and green transformation (GX).

Furthermore, the government’s policy to maximize the use of power sources that contribute to energy security and have a high decarbonization effect, such as renewable energy and nuclear power, presents the Group with opportunities to expand its business domains.

In view of such situation, the Group has reassessed the market and decided to optimize its business portfolio by increasing its focus on the substation market, where construction of new and additional substation facilities is expected to grow alongside rising electricity demand, and the nuclear power market, where construction activity is expected to increase in preparation for the resumption of nuclear power plant operations. Meanwhile, in the renewable energy related market a market of enormous scale, the Group will continue to pursue selective order taking in segments that offer higher profitability. As these initiatives progress, the Group will strengthen its human capital, the single most important element laid out in the FY2024 mid-term management plan (FY2024-FY2026), by expanding development efforts to include not only the Company’s employees but also human resources at partner businesses in order to achieve the goals set for the final year (FY2026).

In these circumstances, our forecast of consolidated financial results for the fiscal year ending March 31, 2026 is as follows:

Consolidated Earnings
Net sales ¥82,000 million
Operating profit ¥3,900 million
Ordinary profit ¥4,100 million
Profit attributable to owners of parent ¥3,400 million