OBAYASHI CORPORATION
1802・Prime Market・Construction
Business
Obayashi Corporation is a major general contractor founded in 1892, comprised of the Company together with 130 subsidiaries and 26 affiliated companies. Its core Construction Business consists of four segments—Domestic Building Construction, Overseas Building Construction, Domestic Civil Engineering, and Overseas Civil Engineering—accounting for approximately 93% of consolidated net sales. Domestically, the Company undertakes large-scale redevelopment and infrastructure projects, while overseas it operates local subsidiaries in North America, Southeast Asia, Oceania, the UK, and elsewhere. In its Real Estate Business, it sells and leases developed properties, and it also operates PFI, Renewable Energy, ICT, and Financial businesses. Under a dual head-office structure in Tokyo and Osaka, the Company, as a Prime Market-listed firm, provides construction services to a wide range of stakeholders.
Business Model
In the construction business, the core model is a contracting structure in which orders are received from clients and construction revenue is recognized upon completion and handover of work. Profit margins are managed through selective order intake focused on projects with good profitability and by securing additional and change orders. In the real estate business, capital gains from the sale of self-developed properties are combined with stable income from leasing. In the PFI and renewable energy businesses, the company earns revenue as a business operator through investment in and financing of special purpose companies.
Company Strengths
As of March 31, 2026, non-consolidated backlog reached ¥2,910,232 million (Buildings ¥1,985,978 million; Civil Engineering ¥924,254 million), with large-scale projects such as the Osaka IR construction work, the MUFG Head Office Building plan, and the New Chiba Airport (Narita) C Runway construction accumulating. This order backlog underpins stable progress in revenue and profit from the next fiscal year onward.
In non-consolidated building orders for FY2026 (ending March 2026), the negotiated (non-competitive) contract ratio stood at 63.7%, significantly exceeding competitively bid orders. Backed by years of construction track record and trust-based client relationships, the company maintains a negotiated order base that is difficult for competitors to replicate in a short period, directly contributing to thorough profitability management and margin improvement.
The company is building a proprietary construction production system that integrates three elements: "mechanization of work," "labor-saving in machine operation," and "digitalization of construction processes." It is applying multiple in-house developed technologies on-site, including unmanned operation using Real Haptics, remote and automated crane operation via ORCISM®, and work simulation via GEN-VIR®.
ENVALITH's Perspective
Performance Trend
Revenue was ¥2,586,258 million (previous period: ¥2,590,765 million, down 0.2%), a slight decline due to the reaction from the progress of large-scale domestic construction projects in the prior period. However, operating profit was ¥194,678 million (previous period: ¥142,469 million, up 36.6%), ordinary profit was ¥204,195 million (previous period: ¥152,236 million, up 34.1%), and profit attributable to owners of parent was ¥173,759 million (previous period: ¥145,355 million, up 19.5%), representing a substantial profit increase. The operating profit margin improved to 7.5% (previous period: 5.5%). Improved profitability in domestic construction, progress on the order backlog in overseas civil engineering, and sales of development properties in the real estate business drove the profit expansion. Operating cash flow improved substantially to ¥252,920 million (previous period: ¥84,161 million), and cash and cash equivalents at period-end increased to ¥416,028 million. The forecast for FY2027 (ending March 2027) is revenue of ¥2,945,000 million (up 13.9%) and operating profit of ¥180,000 million (down 7.5%), indicating an outlook of increased revenue but decreased profit. As external factors, the domestic construction market continues to see a firm order environment, but rising construction material prices, exchange rate fluctuations, and developments in U.S. trade policy remain uncertainties going forward.
Growth Strategy
Sustainable growth is being pursued along four axes: strengthening the construction business foundation, expanding overseas operations, diversifying the development business, and cultivating new concession-related business areas.
The company continues planned order-taking activities matched to construction capacity and the ongoing replacement of projects with more profitable ones. In FY2026 (ended March 2026), domestic building construction operating income improved significantly to ¥104,088 million (up from ¥62,784 million in the previous fiscal year), demonstrating the expansion of gross profit on completed construction contracts driven by additional and change orders. The company aims to strengthen sustainable profit generation by reinforcing investment in human resources, DX, and technology as well as capacity expansion investments.
Starting from the consolidation of MWH (December 2023), the company has established a business foundation in the North American water treatment and infrastructure fields. Operating income in the overseas civil engineering business for FY2026 (ended March 2026) reached ¥14,769 million (up from ¥8,006 million in the previous fiscal year), an increase of 84.5% year on year. In the overseas building construction business, large-scale contract wins have increased and the order backlog is expanding. The company is also strengthening its local business foundation in Southeast Asia and promoting the appointment of local personnel to executive management positions.
The company is expanding earnings mainly through the sale and leasing of development properties centered on large-scale office buildings in central Tokyo and Osaka. Real estate business net sales for FY2026 (ended March 2026) totaled ¥106,798 million (up 46.9% from ¥72,712 million in the previous fiscal year), with operating income of ¥19,978 million (up 24.3% from ¥16,071 million in the previous fiscal year). The company is also diversifying investment into growth areas such as logistics facilities and ZEB (net zero energy buildings), and is progressing with the cultivation of global revenue sources through overseas leased office development in London and Bangkok.
Based on the basic strategy of "expanding the business portfolio for sustainable growth" under the Obayashi Group Medium-Term Management Plan 2022, the company is advancing its initiatives in the PPP and concession businesses. As a subsequent event, on May 13, 2026, the company resolved to make an investment in a highway concession business in Jakarta, Indonesia (JTDJP), with plans to raise its equity stake to 48.8% after the second-tranche acquisition and make it an affiliated company, and plans to execute the investment through a local subsidiary, OCI (scheduled to be established in July 2026).
Under the Obayashi Group Medium-Term Management Plan 2022, the company has set a target to bring the cross-shareholding balance to within 20% of consolidated net assets by the end of March 2027. As of the end of FY2026 (ended March 2026), the holding ratio declined to 21.9% (from 22.6% in the previous fiscal year), and the effective ratio, after deducting amounts already agreed for sale, stood at 17.5%, bringing the target within reach. Proceeds from sales are allocated to growth investment or shareholder returns. In FY2026, the company conducted share buybacks totaling ¥58,061 million, achieving a DOE of 5.1% and an annual dividend of ¥88.
Last updated: July 19, 2026