Kumagai Gumi (1861): FY2025 Results Summary — Profit Growth on Margin Improvement Despite Lower Orders and Revenue

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Non-consolidated orders received decreased in FY2025, mainly due to a decline in domestic Building Construction driven by planned restraint considering construction systems and the shift of some confirmed orders to the next term; profitability at the time of order continued to improve. On a consolidated basis, completed construction (net sales) decreased as the group of subsidiaries shrank, while standalone completed construction remained at the same level as the previous term; an improvement in the gross profit margin for domestic Building Construction pushed operating profit and each subsequent profit line higher. For the fiscal year ending March 2027, the company forecasts sales revenue of 500 billion yen and operating income of 31 billion yen, in line with the final-year targets of its medium-term management plan (sales revenue 500 billion yen, operating income 30 billion yen).

Consolidated Results (Full-Year Actual)

Consolidated net sales for FY2025 were 4,877 (100 millions of yen), down 109 from 4,986 in FY2024. Despite the lower net sales, operating profit rose 128 to 271, ordinary profit rose 126 to 270, and profit attributable to owners of parent rose 107 to 201 — all figures in units of 100 millions of yen, as labeled in the source materials. Non-consolidated orders received fell 632 to 3,162 (100 millions of yen), reflecting the decline in domestic Building Construction orders described above.

Item	FY2025	FY2024	Change
Net sales	4,877	4,986	(109)
Operating profit	271	143	128
Ordinary profit	270	144	126
Profit attributable to owners of parent	201	94	107
Orders received (Non-Consolidated)	3,162	3,794	(632)

Segment Results

On a non-consolidated basis, Civil Engineering net sales rose to 1,118 (100 millions of yen) in FY2025 from 1,018 in FY2024, while gross profit was 151 (13.5%), slightly down from 153 (15.0%) a year earlier. Building Construction net sales fell to 2,547 from 2,672, but gross profit rose sharply to 248 (9.8%) from 107 (4.0%), reflecting an improvement in the gross profit margin at the time of order and a reduction in the impact of unprofitable projects. Total non-consolidated net sales were 3,731 (up 8 year on year) with gross profit of 403 (10.8%), up from 262 (7.0%). Among consolidated subsidiaries, net sales decreased due to a decline in K&E’s order backlog and a reactionary decrease from Taiwan Kumagai’s large projects in the previous term, while profit amount and profit margin improved, driven by Gaeart.

Segment	Metric	FY2025	FY2024
Civil Engineering	Net sales	1,118	1,018
Civil Engineering	Gross profit	151 (13.5%)	153 (15.0%)
Building Construction	Net sales	2,547	2,672
Building Construction	Gross profit	248 (9.8%)	107 (4.0%)
Non-Consolidated Total	Net sales	3,731	3,723
Non-Consolidated Total	Gross profit	403 (10.8%)	262 (7.0%)

FY2026 Forecast

For FY2026 (the fiscal year ending March 2027), the company forecasts consolidated net sales of 5,000, operating profit of 309, ordinary profit of 310, and profit attributable to owners of parent of 204 (100 millions of yen), with non-consolidated orders received of 3,879. Per the Highlight page, this corresponds to forecast sales revenue of 500 billion yen and operating income of 31 billion yen, matching the final-year financial targets of the medium-term management plan (sales revenue 500 billion yen, operating income 30 billion yen). The company expects order acquisitions in FY2026 to exceed the level of FY2025 and earlier.

Item	Forecast	FY2025 (Actual)
Net sales	5,000	4,877
Operating profit	309	271
Ordinary profit	310	270
Profit attributable to owners of parent	204	201
Orders received (Non-Consolidated)	3,879	3,162

Shareholder Returns

For FY2025, the company paid a dividend per share of 47.00 yen (20 yen interim, 27 yen year-end), with a dividend payout ratio of 40.2%, compared with 130.00 yen (payout ratio 59.7%) in FY2024. The number of shares issued was 173,142,240 in FY2025 versus 43,285,560 in FY2024, per the company’s materials. The company also acquired treasury stock worth 35 (100 millions of yen) — stated elsewhere in the materials as 3 billion 500 million yen — during the period from January 30, 2026 to March 19, 2026 (Director’s resolution dated January 8, 2026), following the mutual sale of shares with Sumitomo Forestry. Total payout ratio (dividends plus treasury stock acquisition) was 57.7% for FY2025. For FY2026, the company forecasts a dividend per share of 50.00 yen (25 yen interim, 25 yen year-end) with a payout ratio of 41.6%. The Mid-Term Management Plan (FY2024-FY2026) sets a basic profit-allocation policy of a dividend payout ratio of approximately 40%, returning profits in a reasonable and stable manner, while flexibly considering additional returns including treasury stock purchases depending on the business environment and progress of business strategies and investments.

Item	FY2025	FY2024
Dividend per share	47.00 yen	130.00 yen
Total dividend paid	81	56
Payout ratio	40.2%	59.7%
Total payout ratio	57.7%	59.7%
Number of shares issued	173,142,240 shares	43,285,560 shares

Medium-Term Plan / Topics

Under the Mid-Term Management Plan (FY2024-2026), the company’s financial targets are: capital efficiency of ROE 10% or more by FY2026, an equity ratio of approximately 45%, and a dividend payout ratio of approximately 40%. The cost of shareholders’ equity is recognized as around 7%. The Board of Directors has adopted a resolution on initiatives to further reduce cross-shareholdings. In January 2026, with the aim of enhancing capital efficiency and further increasing shareholder value, the company and Sumitomo Forestry mutually sold approximately 30% of the shares each held in the other: Sumitomo Forestry’s stake in Kumagai Gumi fell to 15.0% from 21.6%, and Kumagai Gumi’s stake in Sumitomo Forestry fell to 1.7% from 2.5%. Regarding external risks, the company recognizes the impact of the current Middle East situation on its business and performance as limited and an indirect risk at this time, and states there is no direct impact from the August 2025 agreement on U.S. tariffs, as the group does not engage in export or import transactions with the United States.

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.