ONOKEN CO.,LTD.

Business Details

Based in the Kyushu / Chugoku area, this segment operates the Steel & Building Materials Sales Business (steel plates, bar steel, round bar steel, wire rods, and construction machinery products) and the Construction Contracting Business. Consolidated subsidiaries Ono-Ken Okinawa Co., Ltd. and Ono-Ken Steel Co., Ltd. are also included in this segment. Its main customers are construction-related businesses, and it handles a wide range of projects from large-scale redevelopment projects in urban areas to civil engineering building materials in regional areas. Net sales to external customers for FY2026 (ending March 2026) were ¥138,708 million, accounting for approximately 54.1% of total reportable segment sales of ¥256,739 million, making it the largest segment. Note that from FY2027 (ending March 2027), the segment is scheduled to be split and reorganized into the "Kyushu / Okinawa Area" and the "Chugoku / Shikoku Area."

Recent Overview

Lower sales and significantly lower profit, along with an impairment loss on fixed assets of ¥6,920 million

In FY2026 (ending March 2026), net sales to external customers declined to ¥138,708 million (down 9.2% year on year) due to lower sales volume of steel products and weak market conditions. The Construction Contracting Business was also affected by delays in the progress of large-scale projects, resulting in lower sales. In addition to the impact of lower sales, depreciation and amortization expanded to ¥1,939 million (up ¥484 million year on year) due to capacity expansion, resulting in segment profit of ¥2,797 million (down 32.2% year on year). Furthermore, in light of the business environment and medium- to long-term business strategy, the company recorded an impairment loss on fixed assets of ¥6,920 million as an extraordinary loss in the Kyushu / Chugoku area. From FY2027 (ending March 2027), the segment will be split and reorganized into the "Kyushu / Okinawa Area" and the "Chugoku / Shikoku Area," with the aim of refining management granularity and strengthening collaboration among bases and group companies.

Key Products

Growth Drivers

• Expansion of the Construction Contracting Business: orders and progress for large-scale urban redevelopment projects (commercial facilities, logistics warehouses) are proceeding largely smoothly
• Focus on order-taking activities for civil engineering building materials related to national resilience measures
• Pursuit of stable earnings less susceptible to steel market conditions by enhancing added value through expanded processing equipment
• Effects of subdivided management and enhanced intra-group collaboration through the reorganization into a 4-area system (Kyushu / Okinawa, Chugoku / Shikoku) from FY2027 (ending March 2027)
• Promotion of sales price increases accompanying rising steel market conditions led by domestic manufacturers

Risks

• Risk of declining sales unit prices due to continued weak steel market conditions
• Risk of delayed or cancelled orders for small and medium-sized projects in regional cities due to rising construction costs and labor shortages
• Risk of delays in the progress of large-scale projects in the Construction Contracting Business
• Risk of profit margin pressure due to increased depreciation and amortization associated with capacity expansion
• Risk of recording additional impairment losses on fixed assets (¥6,920 million already recorded in the current period)
• Risk of continued investment adjustments and demand stagnation due to the impact of US tariffs and other factors
• Risk of increased management costs during the transition period associated with area reorganization (3 areas → 4 areas)