Taisei Q1 FY2027: Sales Rise, Orders Slump; Full-Year Outlook Unchanged

Taisei's first-quarter revenue rose 18.4% year-on-year to ¥521.2 billion, with operating profit up 15.3% to ¥45.3 billion and net profit attributable to parent shareholders climbing 4.8% to ¥30.9 billion. The gross profit margin improved to 16.4% from 15.4% a year earlier, supported by higher profitability in the building construction and development segments. However, a rise in SG&A expenses (up 41.2% to ¥40.2 billion) and deteriorating non-operating income limited bottom-line growth.

Orders plunged 24.5% to ¥475.9 billion, reflecting the absence of large projects booked in the year-earlier period and a changing demand environment. The company left its full-year forecasts unchanged: revenue of ¥2,420 billion (up 15.8%), operating profit of ¥188 billion (virtually flat), and net profit of ¥151 billion (down 11.2%). Quarterly progress on revenue (21.5%) and operating profit (24.1%) remains solid, but the order slump clouds the outlook.

Revenue and profit by segment were as follows:

• Civil Engineering: Revenue ¥165.6 billion (+16.9%), but segment profit fell 37.9% to ¥15.3 billion (margin 9.2%), as lower profitability at the parent and subsidiaries offset higher volume from consolidated subsidiaries.
• Building Construction: Revenue surged 21.6% to ¥309.6 billion, and profit soared 199.1% to ¥25.0 billion (margin 8.1%), driven by increased work volume and improved margins, particularly in large private-sector projects.
• Development: Revenue edged up 1.7% to ¥42.4 billion, while profit grew 46.2% to ¥9.3 billion (margin 22.0%), reflecting strong condominium sales.
• Other (including logistics): Revenue rose 41.7% to ¥3.4 billion, and profit increased 69.6% to ¥0.7 billion.

The full-year forecast for FY2027, unchanged from the May 14 announcement, calls for revenue of ¥2,420 billion (+15.8% vs. prior year), operating profit of ¥188 billion (flat), ordinary profit of ¥187 billion (-4.5%), and net profit of ¥151 billion (-11.2%). The decline in net profit is due to lower non-operating income and higher tax expenses. With first-quarter progress at 21.5% of revenue and 24.1% of operating profit, achieving the targets hinges on an order recovery after the 24.5% plunge in Q1.

On an unconsolidated basis, parent revenue rose 12.0% to ¥346.7 billion and operating profit grew 35.5% to ¥36.1 billion.

As of June 30, 2026, total assets stood at ¥2,537.6 billion (down 6.5% from March 2026), while net assets decreased 1.5% to ¥974.9 billion. The equity ratio improved 1.9 percentage points to 36.8%. Interest-bearing debt was reduced 3.5% to ¥447.0 billion (including ¥49.2 billion in non-recourse debt).

Taisei plans an annual dividend of ¥380 per share (interim ¥190, year-end ¥190), a 22.6% increase from the previous year's ¥310. The company is also accelerating the reduction of cross-shareholdings, targeting a cut of over ¥500 billion on an acquisition cost basis by June 2026. A ¥4.4 billion gain on sale of investment securities was booked in Q1.

The construction market remains firm, but rising material and labor costs are compressing margins. Geopolitical tensions in the Middle East and U.S. trade policy add uncertainty. Taisei's order decline is a significant risk, especially the roughly 60% drop in domestic private-sector building orders. The full-year forecast hinges on a rebound in order intake. Foreign exchange fluctuations and stock market declines could also affect net assets through investment securities valuation losses.

• Surging construction material and labor costs pressuring project margins
• Downside economic risks stemming from U.S. trade policy and Middle East instability