[Obayashi] Domestic Building — ¥1.14tn Sales, 9.1% Margin, Data-Center Tailwind

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.

Domestic building construction is Obayashi’s single largest business by both revenue and profit — 44.0% of consolidated net sales and 53.5% of consolidated operating profit in FY2025, per the group’s company overview. Page 10 of the Investors’ Guide 2026 opens the guide’s second chapter, moving from group-level introduction into segment-by-segment detail, and gives the numbers, order mix, and project examples behind this segment specifically.

FY2025 snapshot

Metric	Consolidated	Non-consolidated
Net sales	¥1,138.7bn	¥1,094.7bn
Orders received	¥1,200.9bn	¥1,161.3bn

Consolidated operating profit was ¥104.0bn, a 9.1% margin — the profitability that makes this segment the group’s single biggest earnings contributor. Orders received (¥1,200.9bn) ran ahead of net sales (¥1,138.7bn) at the consolidated level, and the same pattern holds non-consolidated (¥1,161.3bn of orders against ¥1,094.7bn of sales) — a sign that the order backlog available to convert into future revenue grew over the year rather than shrank.

Orders received by purpose (non-consolidated), FY2022-FY2025

The mix of what the segment is being hired to build has shifted noticeably over the past four years.

Purpose	FY2022	FY2023	FY2024	FY2025
Office / government buildings	31.2%	32.0%	34.0%	26.9%
Factories and power plants	26.6%	30.4%	27.1%	30.9%
Houses	8.5%	8.1%	2.6%	5.6%
Education, research, and culture	10.4%	11.2%	6.7%	7.0%
Other	23.3%	18.3%	29.6%	29.6%

Factories and power plants held close to or above 30% of orders in three of the past four years, consistent with the data-center and factory demand described below. Office and government buildings, by contrast, fell sharply in FY2025 to 26.9% of orders from 34.0% the year before — still the second-largest category, but its least prominent showing across the four years shown. Houses remain a small and volatile slice of the order book throughout the period, never exceeding 8.5% and dipping as low as 2.6% in FY2024. The “other” category, which includes everything outside the four named purposes, was consistently the largest or second-largest line in every year shown.

What’s driving demand, and what’s constraining it

On the demand side, the guide points to four trends:

• Continued demand for large-scale redevelopments of urban areas
• Expanding data center demand driven by the widespread use of AI and cloud services
• Factory construction demand across semiconductors, machine tools, general machinery, and electrical machinery, driven by the return of production bases to Japan, their diversification, and the government’s designation of specified critical products
• Sports and community facilities supporting urban development and regional hubs

Against that demand, the guide also flags four constraints, grouped separately under “Others” in its business environment summary:

• Construction capacity considerations amid increased demand and overtime-cap regulations
• Tight supply chain conditions due to increased demand
• Soaring construction material prices and rising labor costs
• Progress passing costs through to clients, following revisions to the Construction Business Act and other regulations

The overtime-cap and labor-cost pressures named here are the same ones addressed head-on in Tackling the Labor Shortage, covered later in the guide. The fourth constraint is worth flagging for investors specifically: progress passing through rising costs, following changes to construction-industry regulation, points toward margin protection rather than margin expansion as the near-term goal for this segment.

Major projects

• TAKANAWA GATEWAY CITY / THE LINKPILLAR 1 NORTH/SOUTH
• TOYOTA WOVEN CITY
• HIROSE&CO., LTD. Inashiki Plant
• ES CON FIELD HOKKAIDO

Each of the four project examples lines up with one of the demand trends listed above: Takanawa Gateway City is large-scale urban redevelopment in central Tokyo, the Hirose plant is factory construction, and ES CON Field Hokkaido is the kind of community sports facility the guide cites as a growth driver. Toyota Woven City, a purpose-built experimental city on the site of a former Toyota plant, stands somewhat apart from the other three — less a conventional building project than a demonstration of the kind of large, technically complex work the segment is capable of taking on.

Domestic building construction’s sibling within domestic work is domestic civil engineering, which runs a 9.6% margin on a smaller revenue base. Together, the two domestic construction segments make up 60.5% of group net sales and 74.5% of group operating profit — the profit engine referenced throughout the rest of this guide, and the segment against which the group’s overseas construction, real estate development, and green energy businesses are all, in one way or another, measured.

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.