Chudenko Lifts Q1 Operating Profit 21.5% on Indoor Electrical and HVAC Work, Orders Up 33.6%

Revenue up 13.3%, overheads up 2.4% — that spread made the quarter

Chudenko Corporation (TSE: 1941), the electrical and facilities-works contractor that counts the Chugoku Electric Power group for about a quarter of its non-consolidated revenue, published consolidated results for the first quarter of FY3/2027 — the three months from April 1 to June 30, 2026 — on July 31, 2026 under Japanese GAAP. Revenue rose 13.3% to ¥50,333 million, operating profit 21.5% to ¥5,189 million, ordinary profit 12.5% to ¥5,612 million and profit attributable to owners of the parent 3.7% to ¥3,470 million. Earnings per share were ¥65.56 against ¥61.80, up 6.1% — faster than net profit, because the average share count fell 2.2%, to 52,940,751 from 54,142,090.

The gain was not made at the gross line. Cost of sales rose 13.7% to ¥40,706 million, marginally faster than revenue, so gross profit grew a little more slowly, 11.9% to ¥9,627 million, and the gross margin eased from 19.4% to 19.1%. The leverage came one line lower: selling, general and administrative expenses rose just ¥103 million, or 2.4%, to ¥4,438 million, against a ¥1,021 million increase in gross profit, cutting SG&A from 9.8% of revenue to 8.8%. The operating margin widened from 9.6% to 10.3%. The company credits higher revenue together with stricter cost management, more efficient construction and company-wide cost reduction; on the quarter's figures, that shows up in overheads rather than in the gross margin.

Below the operating line, an equity-method loss and tax absorb most of the gain

Non-operating income rose to ¥895 million from ¥766 million, including interest income of ¥216 million and dividend income of ¥496 million, but non-operating expenses jumped to ¥472 million from ¥50 million, almost entirely because the loss on equity-method investments widened to ¥396 million from ¥29 million. The filing does not say which affiliate caused it. Net non-operating income therefore shrank to ¥423 million from ¥716 million, and ordinary profit grew 12.5%, little more than half the operating rate. A ¥58 million loss on disposal of fixed assets left pre-tax profit at ¥5,553 million, up 11.3%.

Income taxes rose 28.5% to ¥2,074 million, an effective rate of about 37.3% against 32.4% a year earlier. Quarterly tax is calculated by applying an estimated full-year effective rate to pre-tax profit, and the filing gives no reason for the higher rate. Profit for the period was ¥3,479 million, up 3.2%; non-controlling interests took ¥8 million against ¥27 million, leaving ¥3,470 million for owners of the parent.

Comprehensive income tells a different story: ¥12,573 million, up 333.0% from ¥2,903 million. Other comprehensive income swung to +¥9,094 million from −¥468 million, and ¥9,046 million of it was the change in the valuation difference on available-for-sale securities, against −¥146 million a year earlier; investment securities on the balance sheet rose ¥10,343 million to ¥115,150 million. The movement is in the market value of holdings rather than in trading, and the filing does not identify the securities involved.

Indoor electrical and HVAC work grew; telecom and distribution lines shrank

Chudenko has one reportable segment, facilities construction, alongside an Other business covering sales of electrical equipment and construction materials, the manufacture and sale of construction materials, and insurance agency and leasing. Facilities construction revenue from external customers rose 14.3% to ¥45,029 million and segment profit 22.0% to ¥5,156 million, a segment margin of 11.5% against 10.7%. Other revenue rose 5.6% to ¥5,304 million and its profit to ¥114 million from ¥69 million. Segment profits are stated before intersegment eliminations of ¥82 million, against ¥24 million a year earlier.

The revenue breakdown by type of work shows where the growth came from. Indoor electrical works, nearly half of group revenue, rose 17.5% to ¥23,992 million; air-conditioning and plumbing works 25.0% to ¥8,080 million; and transmission, substation and underground line works 62.4% to ¥2,991 million. Against that, information and telecommunications works almost halved, down 48.6% to ¥713 million, and distribution line works slipped 3.1% to ¥7,073 million — the two declines the company itself names. Its description of the environment is brief: manufacturers' capital spending and urban redevelopment held firm, while high raw-material prices, labour shortages and the effect of the Middle East situation were concerns. It says it pressed on with stronger sales and construction capabilities and higher productivity under its Medium-Term Management Plan 2027, covering fiscal 2025 to 2027.

The order book grew far faster than revenue

The supplementary non-consolidated tables cover the parent company alone, whose quarterly revenue was ¥40,201 million, up 12.6%. There, orders received rose 33.6% to ¥81,626 million, about twice the quarter's non-consolidated revenue. Air-conditioning and plumbing orders rose 80.6% to ¥26,147 million, an increase of ¥11,667 million that is 57% of the total rise, and indoor electrical orders rose 28.9% to ¥44,340 million. Information and telecommunications orders fell 76.2% to ¥561 million, distribution line orders were flat at ¥7,336 million, and transmission, substation and underground line orders rose 29.4% to ¥3,240 million.

By customer, orders from the Chugoku Electric Power group — Chugoku Electric Power Co. and its network subsidiary — rose 21.2% to ¥11,957 million, while orders from general customers rose 36.0% to ¥69,669 million, 85.4% of the total; the Chugoku Electric group accounted for 24.1% of non-consolidated revenue. The parent's backlog at June 30, 2026 stood at ¥233,407 million, up 32.4% from ¥176,285 million a year earlier, with the air-conditioning and plumbing backlog up 64.5% to ¥67,122 million. That backlog already exceeds the parent's full-year revenue forecast of ¥195,000 million, and the quarter's orders equal 38.9% of its ¥210,000 million full-year order forecast.

A smaller balance sheet and a higher equity ratio

Total assets fell 1.4% to ¥313,245 million from ¥317,819 million at March 31, 2026. The filing attributes the ¥4,574 million decline mainly to a ¥21,964 million fall in notes and accounts receivable on completed contracts, partly offset by a ¥5,266 million rise in cash and deposits and the ¥10,343 million rise in investment securities. Liabilities fell ¥13,412 million to ¥56,583 million, chiefly on an ¥11,909 million fall in trade payables and a ¥6,462 million fall in income taxes payable, partly offset by a ¥1,475 million rise in advances received on uncompleted contracts. Net assets rose 3.6% to ¥256,662 million, mostly on an ¥8,871 million increase in the valuation difference on securities, and the equity ratio rose to 80.7% from 76.9%. No quarterly cash-flow statement was prepared; depreciation was ¥1,055 million against ¥882 million, and goodwill amortisation ¥161 million in both periods.

Guidance and dividend unchanged

Chudenko left its FY3/2027 forecast, published on April 28, 2026, unchanged: revenue of ¥245,000 million (+7.5%), operating profit of ¥27,000 million (+3.1%), ordinary profit of ¥29,500 million (+7.4%) and profit attributable to owners of ¥19,700 million (+6.6%), or ¥372.12 per share. The first quarter delivered 20.5% of guided revenue, 19.2% of guided operating profit, 19.0% of guided ordinary profit and 17.6% of guided net profit. Guidance implies full-year operating profit growth of only 3.1% against the 21.5% just reported, and the filing does not discuss how it expects the rest of the year to unfold.

The dividend forecast is also unchanged at ¥140.00 per share — ¥70.00 at the half-year and ¥70.00 at the year-end — against ¥135.00 for FY3/2026 (¥65.00 and ¥70.00), an increase of 3.7% and about 38% of guided earnings per share. The attached quarterly financial statements were not reviewed by an auditor.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.