JAPAN FOUNDATION ENGINEERING CO.,LTD.

Business Details

The Group's business areas comprise slope protection works, dam foundation works, anchor works, heavy machinery works, grouting works, maintenance and repair works, environmental conservation works, and construction consulting and geological surveying. While focused primarily on domestic public works, the Group also conducts overseas operations through its U.S. subsidiary, JAFEC USA, Inc. Net sales for the fiscal year under review (FY2025, ending March 2025) were ¥30,279 million (up 28.4% year on year), driven by substantial progress on a ground improvement project at an LNG refining plant site in the United States. 96.0% of orders received were negotiated (tokumei) orders, reflecting the Company's ongoing relationships with customers underpinned by its high technical capabilities.

Recent Overview

Cumulative Q1–Q3 of FY2026 (ending March 2026) saw both sales and profit decline year on year due to the scaling back of the U.S. project

For the nine months ended December 2025 (cumulative Q1–Q3 of FY2026, ending March 2026), net sales were ¥20,783 million (down 9.8% year on year) and operating income was ¥1,335 million (down 19.1% year on year). The main reason was that the U.S. LNG refining plant site ground improvement project, which had significantly driven performance in the prior fiscal year, was limited during the period to detailed design and trial construction work. On the other hand, a large-scale expressway repair project in Hokkaido progressed steadily domestically, with domestic sales rising ¥508 million year on year to ¥14,625 million. The decline in ordinary income (down 8.4%) was smaller than the decline in operating income due to the recording of ¥237 million in foreign exchange gains. The full-year earnings forecast remains unchanged at net sales of ¥29,330 million and operating income of ¥1,460 million. The forecast for the year-end dividend was revised upward to ¥27 per share.

Key Products

Growth Drivers

• Large-scale progress on the ground improvement project at an LNG refining plant site in the U.S. by subsidiary JAFEC USA, Inc. (U.S. sales for FY2025, ending March 2025, rose sharply to ¥10,261 million from ¥2,784 million in the prior period)
• Stable securing of domestic orders amid resilient public investment in line with the National Resilience Basic Policy
• Improved construction profit margins through price pass-through from design changes and cost scrutiny on projects nearing completion
• High technical capabilities and continuing customer relationships that maintain a 96.0% ratio of negotiated (tokumei) orders
• Steady progress on a large-scale expressway repair project in Hokkaido (contributed to a ¥508 million year-on-year increase in domestic sales in Q3 of FY2026, ending March 2026)

Risks

• No follow-on construction work is currently anticipated for the U.S. LNG refining plant site ground improvement project, and U.S. sales and profits are expected to decline substantially from FY2027 (ending March 2027) onward
• Risk of deteriorating project profitability due to continued increases in construction material prices and labor costs
• Constraints on construction capacity due to the aging of construction workers and difficulty securing personnel
• Decline in orders received due to delayed construction start times and intensifying order competition domestically (orders received in FY2025, ending March 2025, were ¥27,772 million, down 15.7% year on year)
• Uncertainty over the economic outlook stemming from the impact of U.S. trade policy and continued price increases