SEMBA CORPORATION

Business Details

The Group operates as a single segment under the Commercial Environment Creation Business, providing research and analysis, planning and consulting, design, supervision and construction, and space production leveraging digital technology for commercial facilities, offices, showrooms, educational institutions, medical facilities, leisure facilities, and other spaces. In addition to domestic operations, the Group expands into the Asian market through overseas subsidiaries in Taiwan, Singapore, China, Vietnam, and Malaysia.

Recent Overview

In Q1 2026, overseas sales trended upward while domestic SG&A increases led to a significant year-on-year decline in profit

Net sales for the first quarter of FY2026 (ending March 2026) (January to March 2026) were ¥7,485 million (down 1.5% year on year). Domestic sales declined slightly to ¥6,488 million (94.3% year on year), while overseas sales rose sharply to ¥997 million (138.3% year on year), driven by progress on a long-term large-scale development project in Taiwan. On the profit side, SG&A expenses increased from ¥936 million to ¥1,074 million due to proactive organizational strengthening and staff increases aimed at future growth; as a result, despite gross profit remaining nearly flat (¥1,492 million), operating profit fell significantly to ¥417 million (down 24.4% year on year). The full-year earnings forecast (net sales of ¥37,000 million, operating profit of ¥2,350 million) remains unchanged, and the annual dividend forecast is also maintained at ¥78.00.

Key Products

Growth Drivers

• Increase in overseas sales driven by progress on a long-term large-scale development project in Taiwan (overseas sales in Q1 2026 up 138.3% year on year)
• Active capital expenditure in offices, hotels, leisure facilities, and other properties, supported by strong corporate earnings and inbound demand
• Continued acquisition of renovation projects for department stores and large complex facilities, as well as government facility projects
• Groundwork for expanded order intake through organizational strengthening and staff increases under the medium-term management plan (from 2025)
• Maintenance of an annual growth trajectory, as reflected in the full-year net sales forecast of ¥37,000 million (up 12.7% year on year)

Risks

• Risk of deteriorating profitability due to rising labor costs stemming from labor shortages (SG&A expenses up 14.7% year on year)
• Rising construction costs due to higher energy prices and raw material costs
• Economic downside risk from geopolitical risks such as U.S. trade policy, deteriorating Japan-China relations, and escalating tensions in the Middle East
• Risk that increased fixed costs from proactive organizational strengthening and staff increases will pressure profit margins (Q1 operating profit margin fell to 5.6% from 7.3% in the same period of the prior year)
• Growing reliance on profit recovery in the remaining three quarters to achieve the full-year forecast