CHUDENKO CORPORATION

Business Details

The equipment construction business centers on five work categories: indoor electrical construction, HVAC and piping construction, information and telecommunications construction, distribution line construction, and transmission/substation underground line construction. While the Chugoku Electric Power Group remains the business foundation, the segment also serves manufacturing, government, and general private-sector clients broadly. It is the Group's core segment, accounting for approximately 90% of consolidated revenue, and is positioned in the "Medium-Term Management Plan 2027" as a key focus area for strengthening sales and construction capabilities.

Recent Overview

Revenue growth driven by indoor electrical and distribution line construction; thorough cost management improved segment profit margin to 12.5%.

In FY2026 (ending March 2026), equipment construction business segment revenue was ¥204,452 million (+3.2% year-on-year), and segment profit was ¥25,655 million (+22.3% year-on-year). While information and telecommunications construction revenue fell sharply to ¥9,010 million (-30.5% year-on-year), revenue growth was driven by indoor electrical construction (+5.0%), distribution line construction (+8.5%), and transmission/substation underground line construction (+12.1%). Thorough cost management and construction efficiency improvements drove a substantial improvement in segment profit margin from 10.6% to 12.5%. Orders received surged to ¥223,775 million (+20.0% year-on-year), and the order backlog carried forward reached ¥191,983 million (+27.2% year-on-year), providing strong visibility into future revenue. Orders received for HVAC/piping construction were particularly strong, up 60.5% year-on-year.

Key Products

Growth Drivers

• Expansion of orders for indoor electrical and HVAC/piping construction, driven by manufacturing capital expenditure and urban redevelopment (HVAC/piping construction orders received up 60.5% year-on-year)
• Increase in distribution line and transmission/substation underground line construction, supported by steady power infrastructure demand
• Improvement in segment profit margin (from 10.6% to 12.5%) through thorough cost management and construction efficiency gains
• High order backlog carried forward of ¥191,983 million (+27.2% year-on-year), providing strong visibility into future revenue
• Strengthening of sales and construction capabilities and increased order-taking in growth areas such as semiconductors and data centers, based on the "Medium-Term Management Plan 2027"
• Increase in sales to the Chugoku Electric Power Group (¥44,769 million, +9.0% year-on-year)

Risks

• Risk of rising construction costs due to persistently high raw material prices
• Constraints on construction capacity due to chronic labor shortages and a shortage of on-site supervisors
• Risk of construction progress delays and revenue recognition volatility in information and telecommunications construction (segment revenue fell 30.5% year-on-year this period)
• Risk of slower manufacturing capital expenditure due to geopolitical risks such as Middle East tensions and trade policy developments
• Impairment risk related to goodwill balances (¥615 million being amortized in the equipment construction business segment)
• Risk of construction capacity shortfalls relative to the sharp increase in order backlog (order backlog carried forward up 27.2%)