Nihon Suido Consultants Co., Ltd.

Business Details

A water infrastructure specialist construction consultant established in 1959. Provides technical consulting services including surveys, planning, design, and construction supervision across three fields: water supply, sewerage, and rivers and others. 93.5% of customers are government agencies. The company's core businesses are Water PPP (public-private partnership for water)-related operations, aging infrastructure and seismic countermeasures, and national resilience initiatives, and it also participates in concession projects such as the Miyagi Prefecture integrated water supply and sewerage public-private partnership operation project. Under the purpose of being a "Water Impact Company," the company is promoting the "Nihon Suido Consultants Group Vision 2030."

Recent Overview

Revenue increased 4.0% year on year, but operating profit fell 8.7% due to higher costs, resulting in higher revenue but lower profit.

In Q1 FY2026 (fiscal year ending December 2026) (January to March 2026), revenue increased to ¥7,409 million (up 4.0% year on year), but cost of sales grew at a faster rate of ¥5,000 million (up 7.7% year on year), exceeding revenue growth, causing gross profit to decline to ¥2,409 million (down 3.0% year on year). Operating profit was ¥1,234 million (down 8.7%), ordinary profit was ¥1,333 million (down 5.5%), and net income attributable to owners of parent was ¥843 million (down 8.5%), with each profit stage falling below the same period of the previous year. By field, water supply grew steadily by 16.8% and sewerage by 4.6%, while river and others declined sharply by 25.7% due to a decrease in orders received. Consolidated orders received decreased significantly to ¥2,813 million (down 55.5% year on year), and the order backlog also showed a downward trend at ¥20,160 million (down 7.6% year on year). The full-year earnings forecast remains unchanged at revenue of ¥24,900 million and operating profit of ¥2,410 million.

Key Products

Growth Drivers

• Promotion of national resilience: Continuous and stable public works-related expenditures are expected based on the "First National Resilience Implementation Medium-Term Plan," expanding demand for infrastructure disaster countermeasures and aging infrastructure measures
• Expanding demand for Water PPP (public-private partnership for water): An increase in public-private partnership projects based on the Cabinet Office's PPP/PFI Promotion Action Plan, and the establishment of Japan's first special purpose company compliant with Water PPP [Level 3.5]
• Aging infrastructure and seismic countermeasures: Demand for renewal of pipelines and other infrastructure laid during the period of rapid economic growth is expanding nationwide, with continued renewal demand for water supply assets exceeding ¥40 trillion
• Accumulation of order backlog: The consolidated order backlog at the end of Q1 FY2026 (fiscal year ending December 2026) remained at a high level of ¥20,160 million, expected to contribute to revenue in the following period
• Promotion of the Nihon Suido Consultants Group Vision 2030: Targets for 2030 include consolidated revenue of ¥30 billion, consolidated operating profit of ¥3 billion (operating margin of 10%), ROE of 10%, and 900 employees, aiming to expand into PPP/PFI and agriculture domains
• Expansion of equity in earnings of affiliates: Equity in earnings of affiliates for Q1 FY2026 (fiscal year ending December 2026) increased significantly to ¥42 million from ¥9 million in the same period of the previous year, expanding revenue contribution from overseas and affiliated companies

Risks

• Risk of fluctuations in public works budgets: Since the majority of revenue comes from government agency projects, reductions in government public works-related expenditures or changes in budget allocation directly impact performance
• Significant decline in orders received: Consolidated orders received for Q1 FY2026 (fiscal year ending December 2026) fell sharply to ¥2,813 million (down 55.5% year on year), with the order backlog also trending downward, down 7.6% year on year
• Profit margin decline due to rising cost ratio: The cost of sales ratio for Q1 rose to 67.5% (from 65.2% in the same period of the previous year), creating structural profit pressure whereby operating profit declined despite revenue growth
• Risk of securing personnel and technology transfer: The shortage of engineers is becoming a serious issue across the construction consulting industry as a whole, with intensifying competition for recruitment and challenges in transferring technical skills to mid-career and younger staff
• Decline in orders in the river and others field: Revenue in the river and others field for Q1 FY2026 (fiscal year ending December 2026) declined sharply by 25.7% year on year to ¥821 million, with the outlook for orders in flood control and water use operations remaining unclear
• Decline in equity ratio: The equity ratio at the end of Q1 fell to 55.1%, down 4.7 percentage points from the end of the previous fiscal year (59.8%). The main cause was an expansion of total assets due to a sharp increase in contract liabilities (from ¥1,715 million to ¥3,870 million)
• Trend in provision for compensation losses on operations: While the balance decreased from ¥562 million at the end of the previous fiscal year to ¥289 million at the end of Q1, continued management of operational quality risk is necessary