Kajima Q1 Net Profit Jumps 17% to ¥30.9 Billion as Fatter Margins Beat a 1.5% Revenue Dip

Kajima Corporation (TSE: 1812), one of Japan's five largest general contractors, reported consolidated results for the first quarter of the fiscal year ending March 31, 2027 (April 1 to June 30, 2026) under Japanese GAAP. Revenue slipped 1.5% to ¥640,089 million, but operating profit rose 7.8% to ¥40,522 million, recurring profit gained 14.4% to ¥44,429 million, and net profit attributable to owners of the parent advanced 16.6% to ¥30,926 million. Basic earnings per share came to ¥66.57, up from ¥56.46 a year earlier, helped by a smaller average share count after buybacks. Comprehensive income jumped 58.4% to ¥28,294 million.

Why profit rose while revenue fell

The quarter is a textbook case of mix beating volume. A large share of the parent company's building-construction backlog is in the early, low-billing phase of execution, which held back reported revenue. Gross margins, however, improved across both parent construction businesses: civil engineering ran at a 21.4% gross margin against a 20.4% full-year plan, and building construction held 11.3% versus a 12.0% full-year target — a solid start given the weighting of early-stage jobs. Overseas subsidiaries added a second lever, booking more real-estate disposals than a year earlier. The combined effect lifted gross profit even as the top line contracted, and improvements in non-operating and extraordinary items widened the gain further down the income statement.

Segments: civil engineering and overseas development lead

Civil engineering was the standout, with revenue up 13.3% to ¥106.21 billion as several large projects hit peak construction, and segment profit surging 56.8% to ¥15.29 billion. Building construction went the other way, revenue down 15.2% to ¥226.16 billion and profit down 24.0% to ¥12.30 billion despite the better margin. Domestic development and design/engineering revenue rose 23.1% to ¥11.32 billion, though profit fell 39.5% to ¥0.49 billion. Domestic subsidiaries grew revenue 7.7% to ¥86.94 billion but saw profit fall 20.2% to ¥4.20 billion on a slightly weaker gross margin and wage-driven cost inflation. Overseas subsidiaries lifted revenue 5.1% to ¥240.59 billion and profit 48.7% to ¥8.14 billion, driven by U.S. development gains; of the 10 to 15 logistics-warehouse sales planned in the U.S. this year, three have already closed and several more are under contract.

Order intake surges 21%

Consolidated construction orders rose 21.1% to ¥630.2 billion from ¥520.6 billion, led by domestic work. On a parent-only basis, orders including development climbed 34.7% to ¥468.9 billion, with private-sector building orders up 63.1%. The parent's carry-forward order backlog stood at ¥3.24 trillion at quarter-end, 28.1% above a year earlier — a visibility cushion that matters more than a single quarter's revenue line for a contractor.

Balance sheet tightens, equity ratio improves

Total assets fell ¥239.8 billion from the March year-end to ¥3,384,488 million (¥3.38 trillion), mostly on a ¥293.1 billion drawdown in trade receivables and completed-work claims, partly offset by an ¥88.8 billion build in cash to ¥492.1 billion. Liabilities dropped ¥190.8 billion to ¥1,997.3 billion, and interest-bearing debt eased to ¥817.7 billion from ¥833.1 billion. Net assets fell ¥49.0 billion to ¥1,387,195 million, reflecting the repurchase of 5,639,500 shares that lifted treasury stock by ¥31.7 billion. Even so, the equity ratio improved 1.4 points to 40.4% from 39.0%.

Guidance and dividend held despite the strong start

Kajima left the full-year forecast published on May 14 completely untouched: revenue of ¥2,900,000 million (−5.5%), operating profit of ¥200,000 million (−16.9%), recurring profit of ¥206,000 million (−14.3%), net profit of ¥170,000 million (−4.1%) and EPS of ¥368.20. The gap between the quarter and the year is wide — Q1 already delivered 20.3% of the operating-profit target and 18.2% of the net-profit target while the plan calls for a full-year decline — but management is explicitly holding back because property disposals are weighted to the second half, and because tight labour supply, rising prices for some petroleum-derived materials and geopolitically driven inflation and rate risk could still bite. The annual dividend forecast is unchanged at ¥146.00 per share (¥73.00 interim plus ¥73.00 year-end), flat year on year.

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.