Obayashi (1802) Q2 2025 earnings summary

Executive summary

• Net sales for FY2024 2Q rose 14.7% year-over-year to ¥1,240.5–1,240.6 billion, driven by large-scale domestic and overseas projects and MWH consolidation.

• Operating income increased 47.5% to ¥45.4–45.5 billion, with profit attributable to owners of parent up 85.3% to ¥55.1 billion, aided by improved project profitability and cross-shareholding sales.

• Orders received surged 69.3–69.7% year-over-year to ¥1,582.9–1,648.4 billion, reflecting robust demand in both domestic and overseas construction.

• Progress in both building construction and civil engineering, with overseas business boosted by MWH consolidation and favorable FX rates.

Financial highlights

• Gross profit margin improved to 9.6% from 8.9% year-over-year; operating margin rose to 3.7% from 2.9%.

• Consolidated equity at ¥1,129.6 billion, down 1.9% from FY2023 year-end due to lower valuation of cross-shareholdings.

• Interest-bearing debt and nonrecourse loans increased to ¥368.3 billion, up 13.7% from FY2023 year-end, reflecting upfront payments for major projects.

• Comprehensive income fell to ¥22.1 billion from ¥93.5 billion due to a significant drop in valuation difference on available-for-sale securities.

• Cash and cash equivalents decreased by ¥66.7 billion to ¥259.8 billion as of September 30, 2024.

Outlook and guidance

• Full-year forecasts unchanged: net sales projected at ¥2,510.0 billion (+7.9% YoY), operating income at ¥93.0 billion (+17.2% YoY), and profit attributable to owners of parent at ¥87.0 billion (+15.9% YoY).

• Orders received expected to remain high at ¥2,520.0 billion, with continued strong demand in domestic building construction.

• Dividend forecast for FY2024 is ¥80 per share, up from ¥75, with a payout ratio of 65.9%.

• ROE forecast to improve to 7.6% and ROIC to 4.2% for FY2024.

• No revisions to previously announced forecasts; progress toward full-year targets is on track, with 49–50% of sales and profit targets achieved in H1.