NAKANO CORPORATION

Business Details

The company operates general construction businesses in Japan and Southeast Asia (Singapore, Malaysia, Indonesia, Thailand, Vietnam) through its Domestic Construction Business Headquarters and Overseas Business Headquarters located at head office. Building construction (private and public sector) and civil engineering works form the core business, leveraging approximately 50 years of overseas experience and know-how to expand operations in the Southeast Asian region. During the current period, the Southeast Asia business expanded rapidly with sales up 117.9%, and profitability improved significantly along with improved construction margins.

Recent Overview

Southeast Asia business more than doubled sales and turned profitable, driving overall earnings in the construction business

In FY2026 (ending March 2026), sales in the Southeast Asia construction business expanded rapidly to ¥61,054 million (up 117.9% year on year), and operating income also improved significantly to ¥2,447 million (from ¥1 million in the prior period), driven by demand for data centers, high-functionality logistics facilities, and manufacturing base relocations. Meanwhile, the domestic construction business saw both sales and income decline, with sales of ¥75,500 million (down 6.9% year on year) and operating income of ¥2,202 million (down 14.9% year on year), as persistently high material prices and rising labor costs squeezed margins. Consolidated orders received eased to ¥131,264 million (down 8.1% year on year), but a backlog of ¥148,345 million was secured, supporting sales for the next period.

Key Products

Growth Drivers

• Continued expansion of demand for data centers, high-functionality logistics facilities, and manufacturing base relocations in Southeast Asia
• Improved construction margins in the Southeast Asia business (operating income of ¥2,447 million in the current period, sharply recovering from ¥1 million in the prior period)
• Expansion of domestic orders received (¥86,546 million in the current period, up 9.8% year on year) and maintenance of a high backlog level of ¥95,371 million
• Increase in orders from public sector clients driven by steady progress in national resilience-related public investment (standalone public sector orders received by the reporting company up 241.5% year on year)
• Expansion of overseas business areas and operational scope, and enhancement of the base network, based on the medium-term management plan "Chuki 86"
• Sustained domestic private-sector construction demand supported by solid private-sector capital investment (reshoring of manufacturing and digital infrastructure development)

Risks

• Prolonged construction periods and worsening profitability in the domestic construction market due to persistently high construction material prices and a deepening shortage of skilled workers
• Foreign exchange risk (yen depreciation and local currency fluctuations) and rising geopolitical risk in the Southeast Asia business
• Concerns over economic stagnation due to rising material prices and export slowdown stemming from U.S. trade policy trends
• Concerns over maintaining medium-term sales due to the decline in Southeast Asia orders received (¥44,718 million in the current period, down 30.2% year on year)
• Declining trend in sales and operating income in the domestic construction business (down 6.9% and 14.9% year on year, respectively, in the current period)
• Impairment losses incurred in the Southeast Asia business (¥108 million recorded in the current period)