TODA CORPORATION

Business Details

The segment in which the Company (Toda Corporation) engages in the execution and contracting of building construction work and related businesses in Japan and overseas. The Building Construction Division is responsible for comprehensive strategic planning, including overseas operations. It broadly receives orders for private-sector construction (logistics facilities, data centers, medical facilities, commercial facilities, etc.) and public-sector construction, and is the core business accounting for approximately 56% of the Group's total revenue. The segment is pursuing profitability improvement through securing appropriate construction periods, prioritizing profitability, and reforming the production process via front-loading.

Recent Overview

Substantial improvement in construction profitability drove segment profit up 62.8% year on year.

In the Building Construction segment (consolidated) for FY2026 (ending March 2026), revenue reached ¥360,837 million (up 15.8% year on year) and segment profit reached ¥26,972 million (up 62.8% year on year), a substantial increase in earnings. The margin improved from 4.6% to 7.5%. On a non-consolidated basis, domestic private-sector construction revenue drove the increase, up 18.4% year on year. On the other hand, non-consolidated orders received decreased to ¥415,967 million (down 6.7% year on year) due to a decline in domestic private-sector construction orders (down 14.2% year on year). Backlog carried forward to the next fiscal year has built up to ¥718,618 million (up 8.3% year on year), forming the foundation supporting the achievement of the FY2027 (ending March 2027) building construction revenue forecast of ¥435,800 million (up 20.8% year on year).

Key Products

Growth Drivers

• Improved profitability of construction in hand: as projects secured at appropriate profit margins progressed, the non-consolidated building construction gross profit margin improved substantially from 10.7% to 13.7%
• Expansion of domestic public-sector construction orders: non-consolidated orders received in FY2026 (ending March 2026) increased solidly by 23.2% year on year to ¥100,248 million, with the public-sector portion of backlog carried forward to the next fiscal year up 41.7% year on year
• Strengthening of the construction execution structure toward the Medium-Term Management Plan 2027 target of ¥435,800 million in building construction revenue (up 20.8% versus FY2026 (ending March 2026))
• Continued margin improvement through elimination of waste and cost reduction at the design and construction preparation stages via front-loading
• A solid base for stable revenue growth underpinned by the buildup of backlog carried forward to the next fiscal year of ¥718,618 million (up 8.3% year on year)
• Capturing robust private-sector construction demand for data centers, logistics facilities, and similar projects

Risks

• A decline in non-consolidated orders received (down 6.7% year on year to ¥415,967 million), with domestic private-sector construction orders falling 14.2% year on year, potentially affecting revenue from FY2027 (ending March 2027) onward
• Continued escalation of construction material prices (price increases and supply delays for petroleum-derived construction materials due to Middle East conditions), posing a risk of rising construction costs
• Continued cost pressure from rising labor costs and a shortage of skilled workers stemming from changes in the labor environment following the '2024 problem'
• Risk of deteriorating profitability due to intensifying order competition (an increasing proportion of competitive bidding for private-sector construction)
• Indirect impact on construction demand and foreign exchange risk from U.S. trade policy and geopolitical risk
• Challenges in securing construction capacity and personnel to achieve the FY2027 (ending March 2027) building construction revenue forecast of ¥435,800 million (up 20.8% year on year)