KRAFTIA CORPORATION

Business Details

This segment engages in the design and construction of electrical work—including distribution line work, indoor wiring work, and telecommunications work—as well as air conditioning and piping work such as air conditioning/heating and cooling, water supply and sanitary facilities, and water treatment work. Building on distribution line work for the Kyushu Electric Power Group as its foundation, the segment has expanded nationwide with large-scale private-sector projects, including redevelopment projects in the Tokyo metropolitan area and Fukuoka, integrated resort projects in the Kansai region, and data center-related construction. Net sales of ¥457,524 million account for approximately 96% of consolidated net sales, making this the core business.

Recent Overview

Operating profit expanded sharply by 34.8% year on year to ¥51,219 million, driven by a substantial improvement in construction profit margins

In the Facility Construction Business for FY2026 (ended March 2026), net sales increased only modestly to ¥457,524 million (up 0.7% year on year), while segment profit rose substantially to ¥51,219 million (up 34.8% year on year) due to improved construction profit margins. On the order front, indoor wiring work orders surged to ¥263,683 million (up 17.7% year on year), and the backlog at period-end accumulated to ¥476,049 million (up 4.8% year on year). This result reflects planned order-taking activities that appropriately passed through rising costs while optimizing personnel allocation. For the Ukujima Mega Solar EPC construction work, the construction site for the AC/DC converter station on the Sasebo side is scheduled to be acquired by the end of April, with completion now expected to be delayed beyond the FY2026 (ending March 2027) target.

Key Products

Growth Drivers

• Continued strong private-sector capital expenditure demand centered on redevelopment projects in the Tokyo metropolitan area and Fukuoka, integrated resort projects in the Kansai region, and data center-related construction
• Continued improvement in construction profit margins (improved profitability through appropriate pass-through of rising costs and optimal personnel allocation)
• Substantial increase in orders received for indoor wiring work (¥263,683 million, up 17.7% year on year), contributing to a backlog at period-end of ¥476,049 million
• Stable foundation of distribution line work orders through outsourcing contracts with the Kyushu Electric Power Group (a major customer accounting for approximately 11.7% of net sales)
• Management policy under the medium-term management plan (FY2025-FY2029) emphasizing order selectivity and margin focus, targeting ordinary profit of ¥60.0 billion and ROIC of 10% or higher
• Continued growth expected, with next-period (FY2027, ending March 2027) facility construction business net sales forecast at ¥481,500 million and orders received forecast at ¥495,000 million

Risks

• Risk of delayed completion of the Ukujima Mega Solar construction work (expected to be delayed beyond completion during FY2026) and reduced profitability due to increased environmental cost burdens at the SPC
• Risk of rising construction costs due to soaring material and labor costs (deteriorating profit margins on projects where price increases are difficult to pass through)
• Risk of construction delays due to tightening labor supply and demand (labor shortages caused by population decline), leading to insufficient construction capacity and difficulty securing personnel
• Risk of impact on domestic companies' capital expenditure plans due to unstable international conditions, including U.S. tariff policy, China's tightening of export restrictions to Japan, and escalating tensions in the Middle East
• Risk of period-to-period fluctuations in net sales due to concentration or dispersion of large-project completions
• Impact on the mid-term sales composition if the decline in orders for air conditioning and piping work (down 9.6% year on year) continues