NIPPON DENSETSU KOGYO (1950): FY2025 Results Summary — Record Orders for a Third Straight Year, Operating Margin Above 10%

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NIPPON DENSETSU KOGYO CO., LTD. reported FY2025 results, covering the fiscal year ended March 31, 2026, on May 18, 2026. Net sales came to 229,207 million yen and operating profit to 23,560 million yen, an operating margin of 10.3%. The company states that orders reached a record high for the third consecutive year, while net sales, operating profit, ordinary profit, profit attributable to owners of parent, and backlog carried over to the next period all reached record highs for the second consecutive year. A dividend of 124 yen per share is planned, for a dividend payout ratio of 40.1%.

Consolidated Results (Full-Year Actual)

The company describes the business environment as one in which public investment remained solid and private capital investment continued to recover, with demand related to urban redevelopment and capital investment such as data center construction expanding, and with investment and equipment replacement for safe, stable transport remaining solid at railway companies. Against the FY2025 forecast announced on January 30, 2026, net sales came in 837 million yen (0.4%) higher and operating profit 1,290 million yen (5.8%) higher, while orders finished 1,210 million yen (0.5%) below the forecast. The gross profit margin rose to 17.9% from 15.8% in FY2024.

Item (million yen)	FY2024 Results	FY2025 Forecast (A)	FY2025 Results (B)	Comparison with the forecast (B-A)
Backlog at beginning of period	173,719	183,075	183,075	–
Orders	223,718	268,580	267,369	-1,210 (-0.5%)
Net sales	216,922	228,370	229,207	837 (0.4%)
Gross profit	34,309 (15.8%)	39,700 (17.4%)	40,923 (17.9%)	1,223 (3.1%)
SG&A	16,375 (7.5%)	17,430 (7.6%)	17,362 (7.6%)	-67 (-0.4%)
Operating profit	17,934 (8.3%)	22,270 (9.8%)	23,560 (10.3%)	1,290 (5.8%)
Non-operating income and expenses	1,466 (0.7%)	1,790 (0.8%)	1,718 (0.7%)	-71 (-4.0%)
Ordinary profit	19,400 (8.9%)	24,060 (10.5%)	25,278 (11.0%)	1,218 (5.1%)
Extraordinary income and losses	815 (0.4%)	1,850 (0.8%)	1,807 (0.8%)	-42 (-2.3%)
Profit attributable to owners of parent	13,192 (6.1%)	16,790 (7.4%)	18,060 (7.9%)	1,270 (7.6%)
Backlog carried over to next period	183,075	226,694	224,253	-2,440 (-1.1%)

Figures in parentheses are ratios to net sales. Unit: million yen. The FY2025 forecast figures are those announced on January 30, 2026.

Segment Results

The Railways segment (construction of electrified railway equipment) accounted for 52.4% of net sales, followed by Buildings at 28.2%, I&C Systems at 13.6%, Associated Business at 3.2% and Environmental Energy at 2.6%. Net sales to JR East totalled 110,181 million yen, or 48.1% of consolidated net sales. In the Railways segment, orders from JR East and other JR companies as well as private railway companies were robust, recording a major increase from the previous year’s record-high result, and both net sales and operating profit reached record highs on improved construction efficiency and pass-through of rising commodity prices. On a non-consolidated basis, JR projects in FY2025 produced orders of 80.7 billion yen against a year-beginning plan of 69.0 billion yen.

In the Buildings segment, the company received multiple orders for large-scale construction such as large-scale redevelopment around stations and data centers, leading to a significant increase in total orders to a record high; net sales also reached a record high. Non-consolidated orders valued at 2.0 billion yen or more numbered 8 projects totalling 37.7 billion yen in FY2025, against 3 projects totalling 8.1 billion yen in FY2024. Within non-consolidated Buildings orders by facility type, office buildings accounted for 26,849 million yen (30.3%), commercial, distribution and factories 21,545 million yen (24.3%) and data centers 11,672 million yen (13.2%), out of a total of 88,665 million yen. In I&C Systems, net sales and profit both increased on contributions from infrastructure sharing projects and network construction, although orders decreased after a reactionary decline following a large-scale network project order in FY2024. Environmental Energy saw higher net sales but lower operating profit due to the impact of certain low-margin projects.

Segment (million yen)	Metric	FY2024	FY2025
Railways	Orders	120,114	137,016
Railways	Net sales	117,160	120,127
Railways	Operating profit	8,986	9,939
Buildings	Orders	58,808	89,219
Buildings	Net sales	60,092	64,522
Buildings	Operating profit	4,267	9,107
I&C Systems	Orders	33,885	31,915
I&C Systems	Net sales	28,156	31,148
I&C Systems	Operating profit	2,325	2,595
Environmental Energy	Orders	6,771	4,184
Environmental Energy	Net sales	5,378	5,962
Environmental Energy	Operating profit	684	241
Associated Business	Orders	4,137	5,033
Associated Business	Net sales	6,134	7,446
Associated Business	Operating profit	1,670	1,676

Operating profit margins by segment in FY2025 were 8.3% for Railways (7.7% in FY2024), 14.1% for Buildings (7.1%), 8.3% for I&C Systems (8.3%), 4.1% for Environmental Energy (12.7%) and 22.5% for Associated Business (27.2%). Segment classifications were revised effective Q2 of FY2024, and results for FY2023 and later are based on the classifications after the revision.

FY2026 Forecast

For FY2026, the fiscal year ending March 31, 2027, the company expects net sales to reach a new record high for the third consecutive year against a backdrop of a high level of backlog at the beginning of the period and orders, and expects operating profit, ordinary profit and profit attributable to owners of parent also to reach new record highs for the third consecutive year. One-off costs prior to office relocation are cited as a factor that will suppress profits, and the company states that strategically-held shares will continue to be reduced ahead of schedule with the scale of that reduction expanded.

Item (million yen)	FY2025 Result	FY2026 Forecast	Year on year
Backlog at beginning of period	183,075	224,253	41,178 (22.5%)
Orders	267,369	253,860	-13,509 (-5.1%)
Net sales	229,207	242,310	13,102 (5.7%)
Gross profit	40,923 (17.9%)	42,960 (17.7%)	2,036 (5.0%)
SG&A	17,362 (7.6%)	19,070 (7.9%)	1,707 (9.8%)
Operating profit	23,560 (10.3%)	23,890 (9.9%)	329 (1.4%)
Non-operating income and expenses	1,718 (0.7%)	1,820 (0.8%)	101 (5.9%)
Ordinary profit	25,278 (11.0%)	25,710 (10.6%)	431 (1.7%)
Extraordinary income and losses	1,807 (0.8%)	2,970 (1.2%)	1,162 (64.3%)
Profit attributable to owners of parent	18,060 (7.9%)	18,470 (7.6%)	409 (2.3%)
Backlog carried over to next period	224,253	239,081	14,827 (6.6%)

By segment, the FY2026 forecast calls for Railways net sales of 128,310 million yen and operating profit of 10,480 million yen, Buildings net sales of 69,710 million yen and operating profit of 9,110 million yen, I&C Systems net sales of 32,800 million yen and operating profit of 2,840 million yen, Environmental Energy net sales of 4,130 million yen and operating profit of 290 million yen, and Associated Business net sales of 7,360 million yen and operating profit of 1,170 million yen. Segment orders are forecast at 126,030 million yen for Railways, 86,490 million yen for Buildings, 32,100 million yen for I&C Systems, 5,410 million yen for Environmental Energy and 3,830 million yen for Associated Business.

Shareholder Returns

The FY2025 dividend is planned at 124 yen per share, an increase of 34 yen from 90 yen in the previous fiscal year and an increase of 9 yen from the most recent forecast amount of 115 yen, with a dividend payout ratio of 40.1%. From FY2024 the company introduced a dividend payout ratio, aiming for 40%, as a new metric to clarify its commitment to returning profit. Total dividends over the period of the NIPPON DENSETSU Three-year Management Plan 2024 are expected to reach approximately 20.4 billion yen under current share conditions, greatly exceeding the plan of 16.0 billion yen or more. The company also states that it will consider and implement additional acquisition of treasury shares while being conscious of the balance between growth investments and shareholder returns.

Item	FY2024	FY2025	FY2026 (Forecast)
Total regular dividends per share	90 yen	124 yen	127 yen
Total regular dividends	5.4 billion yen	7.4 billion yen	7.6 billion yen
Dividend payout ratio	40.2%	40.1%	40.1%

Medium-Term Plan and Capital Efficiency

Under the NIPPON DENSETSU Three-year Management Plan 2024, covering FY2024 to FY2026 (the 83rd to 85th terms), the FY2026 targets are net sales of 238.0 billion yen, operating profit of 18.4 billion yen, ROE of 8% and market capitalization of 200.0 billion yen; the company states it expects all figures to be achieved. The longer-term NDK Vision90 targets for FY2031 (the 90th term) are net sales of 260.0 billion yen, operating profit of 20.0 billion yen, ROE of 10% or more and market capitalization of 230.0 billion yen, and the company plans to review these in the next medium-term management plan.

On capital efficiency, ROE recovered to 8.78% in FY2025 from 3.04% in FY2021, with the DuPont breakdown showing a profit margin of 7.88%, an asset turnover ratio of 0.69 times and financial leverage of 1.55 times. PBR improved from 0.63x at the end of FY2024 to 1.29x at the end of FY2025, PER stood at 15.4x, which the company notes remains below the average for companies listed on the Tokyo Stock Exchange Prime Market of 19x, and market capitalization was 285.4 billion yen. The cost of capital for FY2025 is stated as around 7-8%. On strategically-held shares, a 20% reduction has been achieved, from 32 stocks in FY2023 to 25 stocks in FY2025, with a total sale amount of 4.3 billion yen; the company plans a 70% reduction by FY2029 compared with FY2023 and will continue reducing after FY2026 from 25 stocks to around 10 stocks.

Topics

In securing human resources, the company hired 121 new graduates in FY2025 against a plan of 120, an increase of 28 from the previous fiscal year, and 15 mid-career hires against a plan of 26. The number of construction workers, defined as those directly involved in supervising construction works on-site, was 1,348 in FY2025 versus 1,325 in FY2023, an increase of 1.7%, against a FY2031 target of increasing construction workers by 20% compared with FY2023. Plans for FY2026 call for 120 new graduate hires to join in April 2027 and 26 mid-career hires. In productivity, operational use of generative AI (Microsoft Copilot) expanded from 370 users in April 2025 to 1,500 users in March 2026, and non-consolidated gross profit on completed construction contracts per construction worker rose to 23 million yen in FY2025 from 19 million yen in FY2024. In the Associated Business segment, the company entered into a shareholders’ agreement with Ishizaka Inc. toward establishment of a metal recycling joint-venture company and established the subsidiary JCroc Co., Ltd. in October 2025 to handle the infrastructure sharing business.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.