Kinden Q2 FY2027: Operating profit jumps 32%, outlook raised

Kinden posted higher revenue and profit in April-September 2026, with completed construction revenue, operating profit and interim net income attributable to owners of the parent all above the year-earlier period. The results also exceeded the company’s consolidated forecasts for the six months announced on April 27. Profit growth outpaced revenue growth.

• Completed construction revenue: ¥358.195 billion, up 11.5% year on year. On a non-consolidated basis, work at factories, commercial and entertainment facilities, and logistics facilities increased.
• Operating profit: ¥41.970 billion, up 32.0% year on year. Growth in gross profit on completed construction exceeded the increase in selling, general and administrative expenses.
• Ordinary profit: ¥42.606 billion, up 25.4% year on year. The increase in operating profit was the main driver.
• Interim net income attributable to owners of the parent: ¥31.321 billion, up 38.8% year on year. Gains on sales of investment securities also exceeded the year-earlier level.

Higher work volumes for Kansai Transmission and Distribution, as well as growth in projects for general customers, contributed to the increase in completed construction revenue. Kinden said productivity improvements and cost reductions also improved project profitability, supporting margin gains as well as revenue growth. Interim net income also reflects movements in non-operating and extraordinary items, including gains on securities sales, and should therefore be viewed separately from operating profit growth.

Kinden does not disclose results by business segment in its earnings summary. Its non-consolidated order intake rose 17.2% year on year to ¥540.065 billion, while the backlog at period-end increased 24.8% to ¥830.371 billion, adding to the volume of work available to support future revenue.

General electrical and environmental-related work led the increase in orders. Kinden said orders for general electrical work grew at educational and cultural facilities and commercial and entertainment facilities, while environmental-related orders increased for projects such as office buildings. By contrast, orders for on-premises communications work declined in the information and communications category, and orders related to power generation and substations fell in power and other work, highlighting uneven conditions across work types. Total completed construction revenue on a non-consolidated basis rose 9.0% year on year to ¥291.490 billion, with each of the distribution, general electrical, information and communications, environmental-related, and power and other categories above the year-earlier period.

Kinden raised its consolidated forecast for FY2027, lifting its projections for revenue and each profit measure from the previous guidance. The previous forecast figures are not included in the latest earnings summary, so they are not supplied below.

For its non-consolidated results, Kinden cited improved profitability from productivity gains and cost reductions. The consolidated forecast also newly includes Koden’s results from October 2026 through March 2027, following its conversion into a wholly owned subsidiary on Sept. 30. Kinden also raised its non-consolidated order intake forecast to ¥750 billion from the ¥680 billion announced in April, reflecting both a stronger order environment and better project profitability.

Total assets edged down from the end of the previous fiscal year, while liabilities increased, partly because of borrowings associated with the share buyback, and the equity ratio fell. Operating activities generated cash, but spending related to Koden and the share repurchase was substantial, leaving cash and cash equivalents below the previous fiscal year-end level.

• Dividend: The interim dividend was ¥120 per share, and the full-year forecast is ¥240 per share. This exceeds the previous fiscal year’s annual dividend of ¥130 per share; both the interim and year-end dividends include a special dividend of ¥50 per share.
• Share repurchase: Kinden acquired and canceled 33.5 million shares under a board resolution, with acquisition spending of ¥223.679 billion.

Short-term borrowings increased to ¥229.513 billion from ¥15.002 billion at the end of the previous fiscal year, alongside the share acquisition and cancellation. The substantial increase in shareholder returns came with a lower equity ratio and higher borrowings, making the balance between investment, returns and financial stability an area to watch.

Following a tender offer and other steps, Kinden made Koden a wholly owned subsidiary on Sept. 30, 2026. Koden became a consolidated subsidiary, and Kinden has included its results from October onward in its full-year forecast. The move expands Kinden’s business base through the full acquisition of Koden.

• Expanded consolidation scope: Koden was newly included in the consolidated group, with its results from October 2026 through March 2027 incorporated into the current fiscal-year forecast.
• Cash outlays related to the acquisition: The interim cash flow statement includes ¥42.720 billion in spending to acquire shares in affiliates, among other items.

The acquisition broadens the consolidated group as Kinden pursues productivity improvements and cost reductions in its existing businesses. Since the forecast includes only the six months from October through March, investors will be watching how much earnings contribution continues beyond this fiscal year, as well as how smoothly post-acquisition integration proceeds.

Kinden says its outlook is based on information available to the company and that actual results may differ because of various factors. The earnings summary does not provide a specific list of risks, but the conversion of its backlog into revenue, post-acquisition integration and funding conditions are among the issues to monitor.

• Project progress and profitability: The backlog has grown, but earnings will depend on completing projects on schedule and sustaining cost reductions.
• Koden subsidiary integration: The expanded consolidation scope prompted an increase in the full-year forecast, but integration or earnings contributions could fall short of expectations.
• Financial burden: Short-term borrowings rose with the share repurchase, and the equity ratio declined. Investors should monitor interest costs and changes in financial flexibility.
• Mix of orders: General electrical and environmental-related work grew, while information and communications work and other categories declined, leaving order intake exposed to shifts in demand across business lines.