TOENEC CORPORATION

Business Details

The Facilities Construction segment comprises five divisions: power distribution line construction, underground line construction, indoor wiring construction, air conditioning and piping construction, and telecommunications construction. While the segment is founded on power distribution facility construction orders from the Chubu Electric Power Group (Chubu Electric Power Co., Inc., Chubu Electric Power Grid Co., Inc., and Chubu Electric Power Miraiz Co., Inc.), indoor wiring construction and air conditioning/piping construction for general private-sector companies account for more than half of sales. In addition to domestic operations, the segment also conducts construction work in the Asian region through overseas subsidiaries such as Tri-En TOENEC Co., Ltd.

Recent Overview

Steady progress in indoor wiring construction and improved construction profitability drove a substantial 25.6% year-on-year increase in segment profit.

In FY2026 (ending March 2026), segment profit for the Facilities Construction business increased substantially to ¥25,544 million (up 25.6% from ¥20,334 million in the prior period). Sales in indoor wiring construction were the main driver, reaching ¥99,804 million (up 7.7%), while air conditioning/piping construction, underground line construction, and telecommunications construction saw sales declines. Orders received were strong at ¥241,128 million (up 8.9%), with underground line construction (up 68.8%) and indoor wiring construction (up 10.6%) growing. Backlog at period-end built up to ¥137,016 million (up 9.3%), forming an earnings foundation for the next period. Separately, an allowance for doubtful accounts was recorded at overseas subsidiary Tri-En TOENEC Co., Ltd.

Key Products

Growth Drivers

• Continued high level of private-sector capital investment (demand related to DX promotion and carbon neutrality initiatives)
• Steady progress on large-scale indoor wiring construction projects (hospitals, office buildings, factories, etc.), with non-consolidated sales of ¥99,804 million (up 7.7%)
• Contribution to next-period sales from a surge in underground line construction orders (¥15,333 million, up 68.8% year on year)
• Expansion of next-period sales driven by the buildup in telecommunications construction backlog (¥12,749 million, up 30.0% year on year)
• Stable orders from the Chubu Electric Power Group in power distribution line construction (non-consolidated sales of ¥81,022 million)
• Expansion of orders through area strategy deployment in the greater Tokyo area, Kinki region, and Asia
• Pursuit of new numerical targets following the early achievement of targets under the Medium-Term Management Plan 2027

Risks

• Risk of deteriorating profitability at overseas subsidiary Tri-En TOENEC Co., Ltd. (an allowance for doubtful accounts was recorded during the current period)
• Deterioration in construction profitability due to rising raw material prices and labor costs
• Earnings volatility risk stemming from the projected decline in indoor wiring construction sales to ¥93,500 million (down 6.3%) in the next fiscal year
• Difficulty securing engineers and constraints on construction capacity due to the declining working-age population
• Downside risk to private-sector capital investment from changes in U.S. tariff policy and international conditions
• Risk of continued weakness in orders and sales for air conditioning and piping construction (orders down 14.1%, sales down 11.2%)