Craftia Q1 FY2027: Revenue dips 1.9% as orders surge; profit rises 4%

Craftia's revenue slipped 1.9% to ¥98,696 million in the first quarter, as large projects were in early stages with limited progress recognition. Gross profit edged up 0.1% to ¥19,249 million, but selling, general and administrative expenses rose, pushing operating profit down 3.3% to ¥10,731 million. However, non-operating income from dividends and investment fund gains lifted ordinary profit 4.0% to ¥12,212 million. Net profit attributable to shareholders climbed 9.0% to ¥8,415 million. Orders, boosted by redevelopment projects and price passthrough, jumped 16.1% to ¥146,350 million, and the order backlog reached a record high of ¥528,041 million, up 9.1%, setting the stage for revenue growth in the second half.

The Equipment Construction segment, accounting for 95.6% of revenue, saw sales decline 2.3% year-on-year to ¥94,358 million, but internal dynamics varied. Power distribution works surged 15.0% to ¥14,541 million, driven by grid renewal and renewable energy connections. Indoor electrical works rose 4.2% to ¥49,610 million, supported by redevelopment projects in Tokyo, Kansai, and Fukuoka, and logistics facilities. Air conditioning and piping works dropped 16.9% to ¥30,205 million as large projects hit between-cycle lulls. Orders grew across all sub-segments: power distribution up 9.1%, indoor electrical up 7.8%, and air conditioning up 33.3%, signaling a recovery. The Other segment, including material sales, real estate, renewable energy, and staffing, posted an 8.7% revenue increase to ¥4,337 million, with segment profit also contributing.

Total assets declined by ¥30.1 billion from the previous fiscal year-end to ¥493.2 billion, mainly due to collection of trade receivables. Liabilities also fell by ¥30.1 billion to ¥141.5 billion as payables were settled. Net assets remained stable at ¥351.7 billion, up a marginal ¥1.7 million, with an equity ratio of 70.5%. Cash and deposits rose ¥2.2 billion to ¥54.1 billion, ensuring ample liquidity. The company plans an annual dividend of ¥220 per share (interim ¥110, year-end ¥110), unchanged from the prior year. No share buybacks or special capital measures were announced.

Craftia faces several risks:

• Material and labor cost inflation: Despite price passthrough efforts, pressure on project margins persists.
• Seasonality and large-project dependence: Revenue can swing due to project phasing, as seen in Q1. While backlog is ample, delays or cancellations remain possible.
• Energy policy changes: The Ukujima mega solar project is exploring a shift to the feed-in premium (FIP) system and PPAs; regulatory delays or changes could affect returns.
• Intensifying competition: Entry by general contractors and players from other industries could heighten bidding pressure.

At present none of these have materialized, but expanding orders and effective price passthrough are key to offsetting them.

Craftia left its full-year FY2027 forecast unchanged: revenue of ¥500.0 billion (up 5.0% year-on-year), operating profit of ¥55.5 billion (up 1.6%), ordinary profit of ¥59.0 billion (up 1.4%), and net profit of ¥40.5 billion (up 1.1%). First-quarter progress against the forecast was 19.7% for revenue and 19.3% for operating profit, in line with the company's typical second-half heavy schedule. With record backlog, full-year targets appear within reach.

The mega solar project on Ukujima Island, Nagasaki Prefecture, is advancing into a new phase. The project company (SPC) is in ongoing talks for sea area occupancy permits and secured land rights for a converter station in Sasebo in May 2026. Construction of the converter station and on-island work will begin in earnest, aiming for completion after FY2027. The SPC is also evaluating a switch to the feed-in premium (FIP) system and power purchase agreements (PPAs), which could improve project profitability. For Craftia, this project provides not only construction profits but also investment returns via its SPC stake, making it a key medium-term growth driver.