YURTEC CORPORATION

Business Details

The core business of the YURTEC Group, undertaking contracted construction work in electrical, telecommunications, civil engineering, building construction, and air conditioning/piping works. The business is based in the Tohoku and Niigata areas, operating through a structure that includes domestic consolidated subsidiaries and overseas subsidiaries (SIGMA ENGINEERING JSC, YURTEC VIETNAM CO.,LTD.). Data center construction, renewable energy-related construction, and renovation construction are positioned as key growth fields, and expansion into areas outside Tohoku and Niigata is also being promoted.

Recent Overview

Revenue declined but profit margin improved due to thorough cost management; extraordinary losses recorded at overseas subsidiary

In the Facility Construction Business segment for FY2026 (ending March 2026), revenue to external customers was ¥248,940 million (down ¥5,111 million, or 2.0%, year on year), due to progress on large-scale construction projects at the Company falling below initial expectations, in addition to delays compared to expectations in securing orders for large-scale construction projects at overseas subsidiary SIGMA ENGINEERING JSC. On the other hand, segment profit improved significantly to ¥17,330 million (up ¥1,948 million, or 12.7%, year on year) due to improved construction profitability from thorough cost management. However, a one-time amortization of goodwill of ¥2,017 million related to SIGMA ENGINEERING JSC and impairment losses on customer-related assets and business-use assets were recorded as extraordinary losses, putting pressure on consolidated net income.

Key Products

Growth Drivers

• Continued steady order-taking for planned renewal work on power transmission and distribution facilities and reinforcement/development work on core transmission networks
• Acquisition of new orders through expansion into areas outside Tohoku and Niigata, including data center construction
• Future expansion of orders for renewable energy-related construction (strengthening sales through early information gathering and design cooperation)
• Capturing demand for equipment renewal in renovation construction and proposing technologies to address carbon neutrality
• Continued improvement in construction profitability through thorough cost management (profit margin improved to 6.9% in FY2026 (ending March 2026))
• Expansion of orders and profits in overseas business, including Official Development Assistance (ODA) construction projects
• Strengthening of construction structures and productivity improvement through support for partner companies, enhancement of in-house execution capabilities, and promotion of IT/DX

Risks

• Risk of declining profitability at overseas subsidiary SIGMA ENGINEERING JSC (continuing impact from the COVID-19 pandemic and stagnation in the wind power generation market)
• Risk of delays in progress on large-scale construction projects (fell below initial expectations again in the current period, contributing to the revenue decline)
• Emerging labor shortages in the construction industry due to declining interest among younger workers and an aging workforce
• Risk of deteriorating profitability if rising labor and subcontracting costs cannot be passed on to construction prices in a timely manner
• Risk of delays in obtaining permits and licenses due to cost increases and stricter regulations in renewable energy-related construction
• Risk of a downturn in private-sector capital investment due to changes in the external environment, such as U.S. trade policy
• Foreign exchange fluctuation risk at overseas subsidiaries