ERI HOLDINGS CO.,LTD.

Business Details

The segment's core business is operating as a designated confirmation and inspection body performing Building Confirmation, Interim Inspection & Completion Inspection under the Building Standards Act, while also conducting energy efficiency conformity assessments, housing performance evaluations, and technical review work related to Long-Life Quality Housing certification. Following the full enforcement of the amended Building Standards Act and amended Building Energy Efficiency Act in April 2025, energy efficiency-related operations have been integrated with the former "Building Confirmation & Inspection and Related Business" and "Housing Performance Evaluation and Related Business" segments, and the segment name has been changed to its current form from this fiscal period. Major affiliated companies include Nippon ERI, Housing Performance Evaluation Center, Sakkoken, and Tokyo Building Inspection Organization.

Recent Overview

Operating income surged 169% year-on-year due to the concurrence of a sharp increase in energy efficiency conformity assessments driven by the legal amendment and a fee schedule revision

With the amended Building Standards Act and amended Building Energy Efficiency Act enforced in April 2025 mandating energy efficiency standard conformity for all new buildings including housing, the number of energy efficiency conformity assessments and housing performance evaluations issued increased substantially. In addition, expansion of energy efficiency and structural review operations and a fee schedule revision contributed, resulting in net sales of ¥18,792 million (up 25.3% year-on-year) and operating income surging to ¥4,289 million (up 169.0% year-on-year). The operating margin improved substantially from 10.6% in the prior period to 22.8%. Note that from this fiscal period, the segment name has been changed to "Building Confirmation & Inspection and Housing Performance Evaluation Related Business," integrating energy efficiency-related operations.

Key Products

Growth Drivers

• Continued increase in energy efficiency conformity assessment and building confirmation & inspection operations driven by the mandate for energy efficiency standard conformity for all buildings under the amended Building Standards Act and amended Building Energy Efficiency Act enforced in April 2025
• Unit price increase effect from the fee schedule revision (already contributed to current period results, expected to continue in subsequent periods)
• Expansion of buildings subject to review and increase in review workload due to narrowing of the scope of application of the Article 4 special exemption (structural review exemption)
• New business opportunities created as buildings subject to plan notification became accessible to designated confirmation and inspection bodies under the amended Building Standards Act enforced in November 2024
• Strengthening of business foundation through a market share expansion strategy leveraging M&A (as stated in the medium-term management plan) and making East Japan Housing Evaluation Center an equity-method affiliate (June 2026)
• Improved operational efficiency and competitiveness through DX initiatives including BIM applications, BIM drawing review, and remote inspections

Risks

• Risk of decline in confirmation application volume due to a weak trend in new housing starts (declines year-on-year across owner-occupied, rental, and condominium housing)
• Risk of suppressed construction investment due to rising construction costs and supply imbalances/bottlenecks in building materials and equipment
• Risk of application procedure backlogs associated with responding to legal amendments (backlogs from various application procedures following the April 2025 Building Standards Act amendment are trending toward resolution, but complete resolution may take time)
• Risk of increased costs to secure and train specialized technical personnel such as confirmation inspectors (establishing staffing systems to respond to the sharp increase in workload is a challenge)
• Overall declining trend in new construction floor area in the non-residential construction market
• Uncertainty regarding future construction demand due to the impact of price increases, interest rate increases, exchange rate fluctuations, etc. on the overall economy