[Obayashi] Cash Allocation — ¥420bn Investment CF Over Five Years

Note: This article is a factual summary based on Obayashi Corporation’s published IR material (Investors’ Guide, June 2026 edition). It is not a recommendation to buy or sell any security. Figures are as of the publication of the source material. Investment decisions are your own responsibility.

If MTP2022 KPIs is the scorecard for Obayashi’s Medium-Term Business Plan 2022 (MTP2022), page 26 of the Investors’ Guide is the plumbing behind it: where the cash to run the plan is expected to come from over its five-year span (FY2022–FY2026), and where it is expected to go. The page lays out cash inflows, cash outflows, and a detailed breakdown of the roughly ¥750.0bn investment plan that sits at the center of both. It is one of the more revealing pages in the guide precisely because it is not a results table — it is management’s own map of how growth, shareholder returns and balance-sheet actions are meant to fit together over the plan period.

Where the cash comes in

Obayashi identifies four sources of cash over the five years of MTP2022.

Source	Amount
Five-year forecast of consolidated operating profit during MTP2022	Around ¥480.0bn (budget for the base-salary increase tied to the shift to an inflation economy is already included)
Depreciation	¥120.0bn over five years
Sale of cross-shareholdings, to bring the balance below 20% of consolidated net assets	¥260.0bn, based on stock market prices at the time of the Addendum to MTP2022 (May 13, 2024)
Use of leverage in the real estate development business	¥200.0bn

The operating-profit line connects directly to the year-by-year actuals in MTP2022 KPIs; the cross-shareholding sale connects to the balance-and-sales history in Cross-Shareholdings; and the real estate leverage line is discussed further in Real Estate Development. The note attached to the operating-profit line — that the five-year forecast already budgets for a base-salary increase tied to the shift to an inflation economy — is worth flagging on its own: it shows rising labor costs being treated as a planning assumption rather than a risk to the forecast, consistent with the industry-wide labor shortage covered in Workforce & Robotics Construction.

None of the four sources is described as guaranteed in the way a contracted receivable would be; each depends on execution — profit has to be earned, cross-shareholdings have to find buyers at acceptable prices, and leverage has to be arranged on acceptable terms. Spreading the five-year funding task across four different sources, rather than leaning on operating profit alone, is itself a form of risk management for the plan.

Where the cash goes

Use	Detail
Income taxes	—
Shareholder returns	Annual dividend at a DOE (dividend on equity ratio) of around 5%, plus flexible additional returns — see Capital Policy & Shareholder Returns
Improved payment terms for subcontractors and suppliers	—
Cash used in investing activities	Around ¥420.0bn

The shareholder-return line is set out in full, including the dividend history and the ¥100.0bn share buyback, in Capital Policy & Shareholder Returns. The commitment to improved payment terms for subcontractors and suppliers is a notable line item in its own right: Obayashi works through a network of roughly 1,250 partner companies in the Obayashi-gumi Rin-yu-kai organization, described in Company Overview, and naming payment-term improvements alongside dividends and investment signals that supply-chain cash flow is being managed as a deliberate capital-allocation priority, not left over after everything else is funded.

From a ¥750.0bn investment plan to ¥420.0bn of investing cash flow

The guide also shows how the headline ¥750.0bn investment plan reconciles with the ¥420.0bn of “cash used in investing activities” figure above.

Item	Amount
Investment plan	¥750.0bn
Deduction of amount not included in cash flows from investing activities	(¥190.0bn)
Amount recovered from the sale of assets in the real estate development business	(¥140.0bn)
Amount to be included in cash flows from investing activities	¥420.0bn

The ¥750.0bn investment plan itself is split across seven items, detailed further by pillar in ¥750bn Investment Plan:

Item	Investment Plan
Human resource-related investment	¥30.0bn
DX-related investment	¥90.0bn
Technology-related investment	¥100.0bn
Construction machinery and business facilities	¥75.0bn
Real estate development business	¥300.0bn
Green energy business	¥60.0bn
M&A, capital tie-ups, VC, etc.	¥95.0bn
Investment plan (total)	¥750.0bn

Real estate development is the single largest line at ¥300.0bn, ahead of technology-related investment (¥100.0bn) and DX-related investment (¥90.0bn). That ¥300.0bn figure is the same one detailed in Real Estate Development, where the ¥140.0bn recovered from property sales in the bridge table above brings the segment’s net call on investing cash flow down to about ¥160.0bn.

The two figures — ¥750.0bn and ¥420.0bn — are easy to conflate but answer different questions. The ¥750.0bn investment plan, broken down further by pillar in ¥750bn Investment Plan, is the full scope of what Obayashi intends to spend across human resources, DX, technology, machinery, real estate, green energy and M&A. The ¥420.0bn figure is narrower: it is what that spending is expected to add up to specifically within “cash flows from investing activities,” after setting aside the portion not classified that way and netting off the cash Obayashi expects to recover from selling real estate assets.

What this means for investors

This page is the financial hinge between Medium-Term Plan 2022 Strategy and the individual growth levers described elsewhere in the guide. The four inflow sources show that Obayashi is funding growth from a mix of operating cash flow, portfolio actions (selling down cross-shareholdings) and balance-sheet leverage, rather than relying on profit growth alone. On the outflow side, a DOE of around 5% is treated as a standing claim on cash alongside investment, which is worth keeping in mind when reading the dividend and buyback details in Capital Policy & Shareholder Returns. Taken together with that page and Cross-Shareholdings, this page is the clearest single view in the guide of how Obayashi balances growth spending against cash returned to shareholders.

This article is part of our complete breakdown of the Obayashi Investors’ Guide 2026. See the hub article for the full series.

Note: This article is a factual summary based on Obayashi Corporation’s published IR material (Investors’ Guide, June 2026 edition). It is not a recommendation to buy or sell any security. Figures are as of the publication of the source material. Investment decisions are your own responsibility.