NIPPON RIETEC CO.,LTD.

Business Details

Comprises four divisions: railway electrical facilities (signals, overhead contact lines, power generation/substations, telecommunications), road facilities (traffic signals, signage, sound barriers), indoor & outdoor electrical facilities (outdoor, indoor, solar power generation), and transmission line facilities (overhead transmission lines, grid-connected storage batteries, energy infrastructure for data centers). Major customers include East Japan Railway Company as well as electric power companies, expressway companies, and government agencies. This core business accounts for approximately 95% of consolidated net sales, with its principal revenue base supported by demand for aging infrastructure renewal, national resilience enhancement, and decarbonization.

Recent Overview

Orders received, net sales, and segment profit all reached record highs

In FY2026 (ending March 2026), the Electrical Facilities Construction Business achieved record highs across all key metrics, with orders received of ¥82,389 million (up 31.3% year on year), net sales of ¥70,483 million (up 8.0% year on year), and segment profit of ¥10,152 million (up 23.1% year on year). In particular, orders received in the transmission line facilities division expanded sharply, up 197.1% year on year to ¥20,475 million, driven by the receipt of multiple large-scale projects for grid-connected storage battery and data center energy infrastructure construction. The period-end backlog of construction contracts reached ¥59,624 million (up 25.0% year on year), substantially building up the revenue base for future periods.

Key Products

Growth Drivers

• Continued expansion of public investment supporting renewal demand for aging infrastructure and national resilience enhancement
• Sharp increase in construction work related to grid-connected storage batteries and renewable energy in pursuit of a decarbonized society (orders received in the transmission line facilities division up 197.1% year on year to ¥20,475 million)
• Continued receipt of orders for equipment renewal construction associated with East Japan Railway Company's safe and stable transportation operations (orders received in the railway electrical facilities division up 5.2% year on year to ¥39,973 million)
• Stable revenue recognition supported by an ample backlog of construction contracts (¥59,624 million at the end of FY2026, up 25.0% year on year)
• Improvement in profit margin through continuous price negotiations, cost management, DX promotion, and flexible personnel allocation
• Cross-divisional business expansion into new energy infrastructure construction such as data centers and grid-connected storage batteries

Risks

• Risk of sales concentration with East Japan Railway Company (continued high dependence as a major customer for completed construction contracts)
• Risk of profitability deterioration due to labor shortages, rising labor costs, and soaring material prices
• Risk of a future decline as a rebound effect from the concentration of large-scale project orders in the transmission line facilities division (orders received in FY2026 (ending March 2026) expanded sharply, up 197.1% year on year)
• Skewed business performance due to seasonal fluctuations arising from the concentration of construction completions and deliveries in the fourth quarter
• Risk of rising construction costs due to higher raw material and energy prices stemming from geopolitical risk and U.S. trade policy (tariff increases)
• Risk of a downturn in construction investment due to changes in domestic monetary policy (policy interest rate hikes)