Chudenko Q2 FY2027: Profit growth prompts full-year forecast upgrade

In the six months ended September 2026, Chudenko reported revenue of ¥106.376 billion, up 11.1% year on year, operating profit of ¥13.197 billion, up 24.7%, and net income attributable to owners of the parent of ¥8.771 billion, up 20.3%. Profit growth outpaced revenue growth, and the operating margin improved to about 12.4% from about 11.1% a year earlier.

• Revenue growth: Higher sales from indoor electrical and HVAC piping work offset declines in telecommunications and power distribution line work.
• Operating profit growth: In addition to higher revenue, Chudenko tightened cost controls, improved construction efficiency and pursued companywide cost reductions.
• Ordinary profit growth: ¥13.846 billion, up 26.4% year on year. Higher operating profit and other factors contributed.

The company disclosed a ¥10.621 billion increase in revenue and a ¥2.615 billion increase in operating profit. Improved project profitability management and construction efficiency helped profit growth outpace revenue. Investment in manufacturing facilities and urban redevelopment remained firm, while elevated material costs and labor shortages persisted, making the ability to convert new orders into profitable work an ongoing priority.

Chudenko did not report consolidated results by segment in its earnings release. The figures below are sales by construction business in its non-consolidated results. Indoor electrical work led growth, while transmission and substation underground cable work and HVAC piping work also exceeded the year-earlier period.

Indoor electrical work captured demand from urban redevelopment and capital investment, making the largest contribution to revenue growth. Telecommunications work fell sharply from a year earlier, highlighting uneven performance across businesses. Non-consolidated orders, a leading indicator, totaled ¥142.752 billion, up 30.4% year on year, while the order backlog for future periods reached ¥249.580 billion, up 35.4%. HVAC piping work showed particularly strong growth in both orders and backlog.

Chudenko raised its consolidated forecast for FY2027, citing expected revenue growth in indoor electrical and power distribution line work, as well as improved cost control, construction efficiency and companywide cost reductions. The company expects each profit measure to exceed its previous forecast.

Compared with its previous forecast, Chudenko raised its revenue outlook by ¥12 billion and operating profit outlook by ¥4 billion. Against the previous fiscal year, it now expects revenue to increase 12.8% and operating profit to rise 18.4%. The company also lifted its full-year non-consolidated orders forecast to ¥227 billion from ¥210 billion, reflecting order growth in the first half.

Total assets stood at ¥327.488 billion at the end of the first half, up ¥9.668 billion from the previous fiscal year-end. The equity ratio rose to 79.7% from 76.9%. Chudenko also increased its dividend forecast and approved a share buyback aimed at improving capital efficiency and shareholder returns.

Higher cash and deposits and lower liabilities helped strengthen the company’s financial position. The tender offer is planned to run from Nov. 2 to Dec. 1, 2026, at ¥4,614 per share. The share acquisition period runs through Jan. 31, 2027. The earnings release did not include interim consolidated cash flow figures, so operating, investing and financing cash flows cannot be compared.

Although performance improved, Chudenko cited several concerns in its business environment. The key challenge is converting a larger order book into revenue and profit as planned while managing costs and staffing.

• Persistently high material prices: Higher construction costs could squeeze margins if price increases are passed on slowly.
• Labor shortages: A lack of workers could constrain construction capacity or delay projects. Balancing order growth with available staff and construction resources remains a challenge.
• External conditions, including the Middle East situation: Chudenko identified these as concerns for its business. Changes in material prices and procurement conditions could affect results.
• Uneven sales across construction businesses: Telecommunications work declined sharply year on year. If orders or project progress in individual businesses fall short of expectations, that could weigh on the full-year plan.

Chudenko raised its full-year forecast but cautioned that actual results may differ from projections for a range of reasons. Investors will be watching whether the company can work through its larger backlog in the second half while continuing to improve construction efficiency and manage costs.