The Kodensha, Co., Ltd.

Business Details

A core business engaged in the design, construction, and contracting of indoor wiring construction, transmission line construction, power generation/substation construction, communications construction, and air conditioning construction. The segment focuses primarily on large-scale new construction and renovation projects for private-sector clients, and maintains a close business relationship with the Mitsubishi Electric Corporation group. Part of the construction work is outsourced to the subsidiary Koden Kouji Co., Ltd., and part of the design and cost estimation work is outsourced to Kodensha Kiden Kotei (Beijing) Co., Ltd. In FY2026 (ending March 2026), this segment accounted for approximately 80.1% of sales composition, comprising the majority of consolidated sales.

Recent Overview

In FY2026 (ending March 2026), both sales and profit increased year-on-year. Revenue disaggregation information was corrected and publicly announced.

In the Electrical Equipment Construction segment for FY2026 (ending March 2026), sales reached ¥35,474 million (up 17.0% year-on-year) and segment profit reached ¥5,447 million (up 20.0% year-on-year), achieving increases in both sales and profit. The segment profit margin improved modestly to 15.4% from 15.0% in the prior year. Separately, on May 21, 2026, an error was discovered in the revenue disaggregation information in the financial results report, and a correction was announced. Following the correction, revenue recognized at a point in time was ¥6,258 million and revenue recognized over time was ¥29,216 million (total sales of ¥35,474 million remained unchanged).

Key Products

Growth Drivers

• Increase in orders for large-scale renovation and new construction projects driven by continued high levels of private-sector capital expenditure and construction investment
• Improvement in gross margin through appropriate pricing reflecting cost increases and continued cost reduction measures (segment profit margin: 15.0% in prior year → 15.4% in current year)
• Maintenance and strengthening of a stable order base through expanded transactions with the Mitsubishi Electric Corporation group
• Strengthened construction capacity following the acquisition of all shares of Toshin Denki Kogyo Co., Ltd. in December 2024 (a measure under the medium-term management plan's "strengthening construction capacity" initiative)
• Visibility of future sales through a high level of carried-forward construction backlog for the next period (¥45,239 million at the end of the prior fiscal year)

Risks

• Risk of rising material and equipment prices due to increased labor unit costs from labor shortages and rising copper prices, among other factors
• Impact on construction capacity from the overtime work cap regulations (the "2024 Problem")
• Risk of recording a provision for construction losses due to errors in estimating total construction costs
• Risk of deteriorating profitability due to an increase in the competitive order ratio for indoor wiring construction
• Risk of a slowdown in capital expenditure and construction investment due to changes in domestic and international social and economic conditions