INFRONEER Holdings Inc.

Business Details

The Paving Business segment, centered on Maeda Road Construction Co., Ltd. and Mitsui Sumitomo Kensetsu Road Co., Ltd., among others, engages in construction work such as paving construction along with the manufacture and sale of asphalt mixture, etc. Its primary market is demand for maintenance, management, and renewal of public infrastructure, serving both public-sector and private-sector customers. The manufacturing/sales division ensures a stable supply of asphalt mixture, giving the segment a vertically integrated earnings structure alongside the construction division. From this fiscal year, the results of Mitsui Sumitomo Kensetsu Road Co., Ltd. have been included in consolidation, and the segment forms a stable earnings base within the Group.

Recent Overview

Both sales and profit increased due to full-year consolidation contribution from Mitsui Sumitomo Kensetsu Road, with civil engineering works expanding significantly

In FY2026 (ending March 2026), the Paving Business recorded sales to external customers of ¥282,240 million (up 7.3% year on year) and segment profit of ¥21,381 million (up 7.4% year on year). This was driven by the inclusion of Mitsui Sumitomo Kensetsu Road Co., Ltd.'s results in consolidation from this fiscal year. In construction work, profit increased due to improved profit margins at the time of order receipt and maintenance of appropriate sales prices for asphalt mixture. Meanwhile, paving construction orders declined slightly by 2.1% year on year to ¥303,519 million. Civil engineering works sales expanded significantly, up 46.8% year on year to ¥57,072 million, advancing diversification of the sales composition. Projected sales for FY2027 (ending March 2027) are ¥293,800 million (up 4.1% year on year).

Key Products

Growth Drivers

• Resilient public investment: continued execution of budgets related to infrastructure aging countermeasures and national resilience is underpinning demand for paving construction
• Improved profit margins at order receipt: thorough pursuit of orders securing appropriate profit has led to an improving trend in segment profit margin
• Progress in passing through asphalt mixture price increases: profitability of the manufacturing/sales division secured by maintaining appropriate sales prices in response to the external environment
• Consolidation contribution from Mitsui Sumitomo Kensetsu Road Co., Ltd.: following the full subsidiary conversion of the Sumitomo Mitsui Construction group, Mitsui Sumitomo Kensetsu Road Co., Ltd. contributed to full-year consolidation, expanding the scale of business
• Expansion of civil engineering works orders and sales: Maeda Road Construction's civil engineering works orders increased 46.7% year on year and sales increased 49.5% year on year, significantly advancing diversification of sales composition

Risks

• High proportion of competitive bidding: the majority of paving construction orders are won through competitive bidding, creating a risk of margin decline amid intensifying price competition
• Raw material price volatility risk: fluctuations in petroleum-based raw material prices, the main input for asphalt mixture, directly affect the profitability of the manufacturing/sales division
• Fluctuations in public investment budgets: potential reductions in public investment budgets due to fiscal constraints may affect demand for paving construction
• Labor shortage and rising labor costs: rising labor costs amid worsening labor shortages across the construction industry as a whole risk pushing up construction costs
• Impairment risk: an impairment loss of ¥1,304 million was recorded again this period, indicating continued risk of asset value deterioration
• Declining trend in paving construction orders: orders for paving construction in FY2026 (ending March 2026) declined significantly by 16.4% year on year to ¥148,769 million, raising concerns about the impact on sales in subsequent periods