TENOX CORPORATION

Business Details

The core segment of the Group. It engages in civil engineering and building foundation work (pile work and ground improvement work) and ground improvement work in general, as well as ancillary businesses such as construction equipment leasing. In addition to the parent company, Tenox Giken Co., Ltd., Hiroshima Gumi Co., Ltd., Oomishima Bussan Co., Ltd., and, overseas, TENOX ASIA COMPANY LIMITED handle the business. Customers include both public sector clients (infrastructure and disaster prevention) and private sector clients (factories, logistics facilities, etc.), making this the mainstay segment accounting for over 97% of consolidated net sales.

Recent Overview

Although revenue declined 11.6%, the profit margin improved significantly from 4.8% to 6.2% due to improved construction efficiency.

Revenue in the Construction Business for FY2026 (ending March 2026) was ¥20,478 million (down 11.6% year on year). While large-scale pile work related to railway and other infrastructure decreased, large-scale ground improvement work for factories and logistics facilities increased. On the profit side, despite the impact of rising labor costs, construction profitability improved through optimization of contract terms and improved construction efficiency, resulting in segment profit of ¥1,267 million (up 14.8% year on year) and a profit margin of 6.2%, an improvement of 1.4 percentage points year on year. Leading indicators contracted, with orders received of ¥17,304 million (down 18.0% year on year) and an order backlog of ¥6,568 million (down 32.6% from the prior fiscal year-end).

Key Products

Growth Drivers

• Improvement in construction profitability through optimization of contract terms and improved construction efficiency (profit margin improved from 4.8% to 6.2%)
• Increasing demand for large-scale ground improvement work for factories and logistics facilities
• Solid trend in public investment driven by disaster prevention, disaster mitigation, and national resilience measures
• Strengthened collaboration in the ground survey and analysis field through a capital and business alliance with Japan Home Shield Co., Ltd. (share acquisition in January 2026)
• Expansion of overseas business (Vietnam) and development of new construction methods based on the medium-term management plan (FY2024–FY2026)

Risks

• A structure whereby performance is easily affected by order trends for large-scale construction projects (in FY2026 (ending March 2026), revenue declined 11.6% due to a decrease in large-scale pile work)
• Substantial contraction in orders received and order backlog (orders received of ¥17,304 million, down 18.0% year on year; order backlog of ¥6,568 million, down 32.6% from the prior fiscal year-end), creating downward pressure on revenue in subsequent periods
• Cost pressure from persistently high construction material prices and continued increases in labor costs
• Increased costs to address the aging workforce, labor shortages, and compliance with overtime work limit regulations at construction sites
• Risk of estimation errors in total construction revenue and total construction costs (for projects applying the percentage-of-completion method)