KITANO CONSTRUCTION CORP.
1866・Standard Market・Construction
Business
Kitano Construction Corporation, established in 1946 (founded in 1917), is a mid-tier general construction company based in Nagano Prefecture. The company consists of the parent and five consolidated subsidiaries, with its core business centered on construction (building, civil engineering, development, and solar power generation), alongside a golf course business (Kawanakajima Country Club), a hotel business (with three locations in Nagano City, the Solomon Islands, and Hanoi, Vietnam), and an advertising agency business. The company is listed on the Standard Market of the Tokyo Stock Exchange. The construction business accounts for approximately 95% of net sales, and the company upholds a management philosophy of community-based management and "high-quality, high-value-added manufacturing." Its main clients are private developers (such as Tokyu Land Corporation) and government agencies, with a high proportion of private-sector business.
Business Model
In the construction business, the company undertakes building and civil engineering work through negotiated and competitive bidding, adopting a contracting model in which revenue is recognized as completed construction revenue. The company aims to improve profit margins through a selective order-taking policy that prioritizes profitability. In the development business, the company accumulates real estate leasing income (¥1,361 million in the current period). The non-construction businesses (hotels, golf courses, and an advertising agency) serve as a stable earnings complement, contributing to earnings diversification across the group as a whole.
Company Strengths
As a result of thoroughly implementing profitability-focused selective order-taking, construction segment profit for FY2026 reached ¥4,127 million, up 30.3% year on year. Profit expanded even as net sales declined 2.8% year on year, and the figures confirm that order management emphasizing quality over quantity is functioning effectively.
As of the end of March 2026 (Reiwa 8), non-consolidated backlog stood at ¥69,992 million (Building construction: ¥64,818 million; Civil engineering: ¥5,173 million). This represents approximately 94% of completed construction revenue of ¥74,190 million for the fiscal year, providing capacity to record revenue in future periods. Company-wide certification under ISO9001 and ISO14001 (completed in 2001) also underpins the quality foundation.
In addition to the construction business, the company operates a hotel business (net sales of ¥2,945 million, segment profit of ¥449 million), a golf course business, and an advertising agency business. The hotel business operates across three locations—domestic, the Solomon Islands, and Vietnam—functioning as a buffer against fluctuations in construction market conditions. Real estate rental income (¥1,361 million) also continues to accumulate as a stable revenue source.
ENVALITH's Perspective
Performance Trend
Revenue peaked at ¥85,277 million in FY2023 and has declined for three consecutive periods, reaching ¥78,791 million in FY2026 (ending March 2026), down 2.5% year on year. Meanwhile, operating profit improved substantially to ¥4,640 million (up 27.5% year on year), with the operating profit margin recovering to 5.9% (from 4.5% in the prior period). The main driver was an improvement in the gross profit margin on completed construction contracts (13.3%), reflecting the effect of the selective order-taking policy in the figures. Net income attributable to owners of the parent was ¥3,490 million (up 3.2% year on year). For the next period (FY2027, ending March 2026), the company forecasts revenue of ¥86,000 million and operating profit of ¥5,000 million, anticipating an increase in both revenue and profit driven by the drawdown of carried-over construction backlog and a recovery in orders received. Risks remain from the external environment, including persistently high labor costs and raw material prices, as well as downside risks to the economy stemming from US tariff policy.
Growth Strategy
Achieving sustainable growth through profitability-focused selective order-taking, human capital development, and DX promotion
Continuing the policy of excluding low-profitability projects and concentrating management resources on high-margin construction work. In FY2026 (ending March 2026), achieved a gross profit margin on completed construction contracts of 13.3%, improving the operating margin to 5.9%. For the next fiscal year, the company targets operating income of ¥5,000 million (margin of 5.8%).
Promoting productivity improvement through digitalization of construction sites and streamlining of business processes. Positioned as a response to labor shortages and rising labor costs, intangible fixed assets including software investment increased to ¥741 million (from ¥638 million in the previous fiscal year), indicating continued investment.
Strengthening investment in human capital acquisition and development in response to labor shortages in the construction industry. Selling, general and administrative expenses increased 12.6% year on year to ¥7,049 million, reflecting higher personnel-related costs. The company has explicitly stated a policy of continuing investment in human resources in the next fiscal year as well.
The hotel business operates at three locations: domestically (Nagano City), the Solomon Islands, and Vietnam. In FY2026 (ending March 2026), hotel business sales reached ¥2,945 million (up 4.5% year on year), with segment profit of ¥449 million (up 10.4% year on year), achieving both higher revenue and profit. The company plans to continue thoroughly implementing a 'customer first' sales approach.
Last updated: July 19, 2026