KAJIMA CORPORATION

Business Details

This segment covers Kajima Corporation's orders and construction work in civil engineering, one of its core construction businesses. It is primarily focused on domestic civil engineering work for public agencies and private clients, spanning a wide range of fields including infrastructure renewal, national resilience initiatives, energy-related facilities, and expressway renewal projects. It also includes some overseas civil engineering work. In FY2026 (ending March 2026), construction progressed smoothly, centered on large-scale projects, and gross profit margin improved significantly. Segment revenue was ¥430,767 million, accounting for approximately 14.0% of consolidated revenue.

Recent Overview

Steady progress on large-scale projects and improved profitability drove a 114.9% year-on-year surge in operating income

In FY2026 (ending March 2026), construction progressed smoothly centered on large-scale projects, and revenue increased 6.6% year on year to ¥430,767 million. Operating income surged 114.9% year on year to ¥76,742 million, primarily due to a substantial improvement in gross profit margin (from 15.4% to 24.6% on a non-consolidated basis). Cost reductions and the securing of additional change contracts contributed to improved profitability. Non-consolidated orders received increased significantly, up 40.6% for domestic public-sector clients and up 73.7% for domestic private-sector clients, and the backlog carried forward remained at a high level of ¥948,880 million (up 24.2% year on year).

Key Products

Growth Drivers

• Boost to revenue and profit from progress on large-scale projects (Mageshima defense facility, Shin-Meishin Expressway, offshore wind power foundation construction, etc.) during their peak construction phases
• Significant improvement in gross profit margin (achieving 24.6% on a non-consolidated basis) through securing additional/design change contracts and cost reduction
• Continued demand for national resilience and infrastructure renewal (stable public investment) and expanding demand for energy-related facilities and renewable energy
• Visibility of future revenue from a high level of backlog carried forward of ¥948,880 million (up 24.2% year on year)
• Improved productivity and enhanced competitiveness through ICT and automation technologies such as the automated mountain tunnel construction system "A4CSEL for Tunnel"
• Outlook for continued high profitability, with a projected gross profit margin of 20.4% for the Civil Engineering business in FY2027 (ending March 2026)

Risks

• Risk of profitability deterioration due to persistently high or further rising construction costs (materials/equipment prices and labor costs)
• Challenges in construction management and schedule control associated with compliance with overtime work limit regulations
• High dependence on large-scale projects, meaning schedule delays or losses on specific projects can have a significant impact on results
• Increasing difficulty securing construction capacity due to the medium- to long-term decline in skilled construction workers
• A significant projected decline in non-consolidated civil engineering orders for FY2027 (ending March 2026) to ¥400.0 billion (down 35.1% from the current period's actual ¥615.8 billion), posing a risk of medium-term decline in revenue and profit levels
• Increasing geopolitical and foreign exchange risk associated with the expansion of overseas civil engineering work