KITAC CORPORATION

Business Details

Kitac Corporation and its consolidated subsidiaries conduct geological survey, civil engineering design, and surveying services primarily within Niigata Prefecture. The company's main clients are national and local governments, and its strength lies in its comprehensive capabilities spanning from survey to design. In the second quarter (interim period) of FY2026 (ending October 2026), completed work revenue was ¥1,572 million, accounting for approximately 88% of the group's total sales of ¥1,778 million, making this the core segment. Key business areas include national resilience promotion services, disaster prevention and mitigation measures, and countermeasures against the aging of social infrastructure.

Recent Overview

Sales were roughly flat, but gross profit margin improved, boosting profitability

In the second quarter (interim period) of FY2026 (ending October 2026), the Construction Consulting Business recorded completed work revenue of ¥1,572 million (down 0.1% year on year), remaining roughly flat. Meanwhile, gross profit increased to ¥609 million (up 5.7% year on year), improving the gross profit margin to 38.8% (versus 36.6% in the same period of the prior year). The company is focusing on securing orders related to national resilience promotion services, disaster prevention and mitigation measures, and countermeasures against aging social infrastructure. Note that group-wide order intake declined significantly to ¥1,419 million (down 25.2% year on year), and order trends in the second half will be key to full-year performance.

Key Products

Growth Drivers

• Steady public works demand underpinned by the National Resilience Implementation Medium-Term Plan (a program scale of approximately ¥20 trillion or more over the five years starting FY2026)
• Continued demand for integrated hard and soft disaster prevention/mitigation measures in response to increasingly frequent and severe natural disasters
• Expanding demand for work driven by the advancement of countermeasures against the aging of social infrastructure such as roads and sewage systems built during the period of rapid economic growth
• Improved order environment due to increased public works-related expenditure in the FY2026 government budget proposal

Risks

• Group-wide order intake for the interim period fell sharply by 25.2% year on year, creating uncertainty about order recovery in the second half and beyond
• Risk of demand fluctuation due to reductions in public works budgets or policy changes
• Risk of client concentration in Niigata Prefecture and the Ministry of Land, Infrastructure, Transport and Tourism, etc. (high dependence on public works)
• Uncertainty in execution budget estimates for contracted work in the Construction Consulting Business (revenue recognition based on percentage of completion)
• Risk of losing order opportunities due to engineer shortages and difficulty securing personnel
• Indirect impact on public investment stemming from uncertainty in the external environment surrounding the Middle East situation and US trade policy