[Obayashi] Medium-Term Plan 2022 — From Foundation to Transformation

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.

Medium-Term Business Plan 2022 (MTP2022) is built around two phases layered onto the same three fundamental strategies. The first phase strengthens the construction business’s foundation; the second accelerates transformation across the group, with a stated goal of stable consolidated operating profit of ¥100bn or more. This page of the Investors’ Guide 2026 sets out both phases, strategy by strategy, and flags where the plan has been updated since its original announcement.

Two phases, one plan

MTP2022 runs for five fiscal years, FY2022 through FY2026. Rather than a hard cutover between two distinct periods, the source slide presents it as a single continuous arrow with the emphasis shifting gradually — from measures for strengthening the foundation of the construction business in the earlier years toward measures for accelerating transformation by the plan’s final years. Each phase is anchored by its own goal statement.

Phase	Goal statement
Strengthen the Foundation	To secure safety and quality, thoroughly implement measures to strengthen the foundation of the business and continue other necessary measures while keeping in mind that the business environment changes constantly.
Accelerate Transformation	Establish a path to medium- to long-term growth through Company-wide transformation and achieve stable consolidated operating profit of ¥100bn or more.

Both goal statements sit above the same set of three fundamental strategies, which gives the plan a consistent structure even as its priorities shift: Fundamental Strategy 1 covers the operational discipline of running the construction business — portfolio, cost risk, and workforce; Fundamental Strategy 2 covers technology and new-business innovation; and Fundamental Strategy 3 covers portfolio and capital-efficiency discipline at the group level.

Three fundamental strategies, before and after

Reading each strategy’s two phases side by side shows what actually changes as the plan matures — from establishing basic controls to building differentiated, higher-value capability on top of them.

Fundamental Strategy 1: Strengthen and Expand the Foundation of the Construction Business

Phase	Initiatives
Strengthen the Foundation	Strategize work portfolio with a focus on securing stable earnings and passing on technologies; suppress material price fluctuation risk, including revision of terms and conditions with clients; BPR (business process re-engineering); retain and develop human resources and maintain, strengthen, and expand the supply chain; respond to the application of overtime cap regulations under Japan’s revised Labor Standards Act
Accelerate Transformation	Value-added proposals and development of differentiated technologies to meet social needs; strengthen the construction value chain and expand construction service domains; improve productivity through the implementation of innovative construction production systems

The foundation-phase items here are largely defensive — protecting margins against material-cost swings, keeping the supply chain intact, and complying with Japan’s overtime cap rules for construction workers. The transformation-phase items build on that base to move toward differentiated, higher-value work and a wider construction service offering.

Fundamental Strategy 2: Innovate Technologies and Businesses

Phase	Initiatives
Strengthen the Foundation	Early transition to the implementation phase of new technologies that contribute to production capacity enhancement; develop innovative construction production systems
Accelerate Transformation	Generate new value for customers in new business domains; develop business models and technologies that will lead to resolving social issues such as carbon neutrality and well-being; promote Circular Timber Construction™

Here the shift is from internal production technology in the foundation phase to customer-facing new business models in the transformation phase — this is the fundamental strategy that connects most directly to the group’s separate new business domains initiative and its carbon-neutrality agenda.

Fundamental Strategy 3: Expand Business Portfolio for Sustainable Growth

Phase	Initiatives
Strengthen the Foundation	Adopt ROIC and ROE as key performance indicators to make management decisions with a focus on capital efficiency
Accelerate Transformation	Establish solid and resilient sources of growth and reorganize the five business domains, enhanced by continuous investment

This is the shortest of the three strategies in bullet count, but arguably the most consequential for how the rest of the plan gets funded: adopting ROIC and ROE as decision-making metrics in the foundation phase sets up the capital-efficiency lens that later governs how investment is allocated and reallocated across all five business domains in the transformation phase.

The May 2024 addendum

A note on the source slide flags that highlighted portions of both phases were added via an addendum announced in May 2024, rather than appearing in the plan’s original FY2022 rollout. Among the items fully highlighted as later additions: the ¥100bn transformation-phase profit target itself, the response to Japan’s overtime cap regulations under the revised Labor Standards Act, the value-added-proposals initiative under Fundamental Strategy 1’s transformation phase, and Circular Timber Construction™ under Fundamental Strategy 2’s transformation phase. That is a reminder that MTP2022 has been actively updated partway through its five-year run — including, notably, the explicit ¥100bn operating-profit figure that anchors the whole transformation phase — rather than simply announced once in FY2022 and left unchanged.

What this means for investors

The ¥100bn stable consolidated operating profit threshold in the transformation phase is worth holding in mind against actual results: the group’s operating profit has already run close to double that floor in recent years, and the full year-by-year track record against MTP2022’s targets — including ROIC, ROE, and EPS — is covered in the companion MTP2022 KPI article. The foundation-phase items on labor and overtime connect directly to the construction market and labor shortage pages; the ROIC/ROE emphasis in Strategy 3 carries through into the group’s capital policy and its ongoing reduction of cross-shareholdings, both framed around the same capital-efficiency logic; and the transformation-phase push into new business domains and carbon neutrality is where this plan meets the group’s new business domains initiatives directly.

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.