Obayashi (1802) Q2 2026 earnings summary

Executive summary

• FY2025 first half consolidated net sales were ¥1,161.2B, down 5.0% YoY, mainly due to a decline in domestic building construction and strategic order alignment.

• Operating income surged 78.0% to ¥80.0B, and profit attributable to owners of parent increased 42.9% to ¥77.9B, driven by change orders, high-margin projects, and real estate sales.

• Comprehensive income rose to ¥76.9B from ¥22.1B a year earlier.

• Upward revision of full-year forecasts: consolidated operating income now expected at ¥165.0B (+15.8% YoY), profit attributable to owners of parent at ¥149.0B (+2.5% YoY), and net sales at ¥2,570.0B.

• Strategic acquisition of GCON Inc. in the U.S. to strengthen North American business, especially in high-growth sectors like data centers and semiconductors.

Financial highlights

• Gross profit increased 35.3% YoY to ¥158.8B, with gross margin improving from 9.6% to 13.7%.

• First half operating income rose by ¥35.0B YoY to ¥80.0B, with a 48.5% progress rate toward the full-year forecast.

• EPS for the period was ¥110.84, up from ¥76.12 YoY.

• Equity increased to ¥1,174.7B (+1.4% from FY2024), while interest-bearing debt declined by 2.9% to ¥352.2B.

• Net cash provided by operating activities was ¥20.5B, a turnaround from a ¥56.6B outflow a year earlier.

Outlook and guidance

• Full-year consolidated operating income forecast revised upward by ¥43.0B to ¥165.0B, mainly due to improved profitability in domestic building and overseas subsidiaries.

• Net sales forecast slightly reduced to ¥2,570.0B, reflecting strategic order intake and project timing.

• Orders received for FY2025 expected to decrease 12.0% YoY to ¥2,920.0B, aligning with construction capacity.

• Annual dividend forecast is ¥82.00 per share, with a payout ratio of 38.3%.

• Continued focus on profitability and selective order intake in both domestic and overseas markets.