Daisue Construction Q1 Operating Profit Nearly Triples on a 30% Revenue Jump, Yet Full-Year Guidance Still Sees Revenue Down 7%

Revenue up 30%, operating profit up 166%

DAISUE CONSTRUCTION CO., LTD. (TSE: 1814), an Osaka-based general contractor, reported consolidated first-quarter results for the three months to June 30, 2026 under Japanese GAAP on August 5, 2026. Revenue rose 29.5% to ¥27,787 million from ¥21,464 million, operating profit 165.7% to ¥2,104 million from ¥792 million, ordinary profit 161.9% to ¥2,101 million, and net profit attributable to owners of the parent 188.2% to ¥1,431 million from ¥496 million. Earnings per share were ¥139.03 against ¥47.54.

Profit rising more than five times as fast as revenue is operating leverage, and in a contractor it usually means margin recovery on the specific jobs being executed. The operating margin reached 7.6%, from 3.7% — a level well above what Japanese general contractors have typically managed through the recent cycle of high material costs. The company does not break the improvement down further.

The forward indicators moved with it. Orders received rose 36.1% to ¥52,365 million, and the order backlog reached ¥204,722 million, up 13.8% from the end of the previous fiscal year. A backlog of ¥204.7 billion against full-year guided revenue of ¥98.4 billion is a little over two years of work already booked.

A balance sheet that barely moved

Total assets were ¥59,749 million at June 30, up just ¥99 million from March 31, with completed-work receivables and contract assets the main increase. Total liabilities fell ¥269 million to ¥34,169 million, mainly on lower construction payables. Net assets rose ¥369 million to ¥25,580 million on the quarter's profit, and the equity ratio edged up to 42.8% from 42.3%.

The group is working toward its medium- to long-term plan "Road to 100th anniversary — Challenge for a Leap Forward", covering FY2024 to FY2030. Management describes an industry where construction material prices remain high and labour shortages are a chronic problem, but where demand from public investment and private capital spending continues to run firm.

Guidance untouched — and it still calls for a shrinking year

Neither the half-year nor the full-year forecast was changed from the May 12 announcement. First-half guidance is revenue of ¥51,500 million, up 9.5%, operating profit of ¥3,110 million, up 27.3%, ordinary profit of ¥3,070 million, up 23.2%, and net profit of ¥2,100 million, up 25.7%, for EPS of ¥202.00. Full-year guidance is revenue of ¥98,400 million, down 6.8%, operating profit of ¥5,750 million, down 12.6%, ordinary profit of ¥5,650 million, down 14.5%, and net profit of ¥3,860 million, up 1.6%, for EPS of ¥371.40.

Two things are worth drawing out of those numbers. First, the full-year forecast has revenue falling 6.8% and operating profit falling 12.6% — after a quarter in which both rose sharply. Combined with first-half guidance for revenue up 9.5%, that implies a second half in which revenue drops around 20% year on year. Second, the quarter has already delivered 67.7% of the half-year operating-profit target and 36.6% of the full-year figure, on 28.2% of full-year revenue, so the margin assumption embedded in guidance for the rest of the year is materially below what the first quarter achieved.

The dividend forecast is unchanged at ¥93.00 at the interim and ¥93.00 at the year-end, ¥186.00 for the year, against ¥87.00 and ¥96.00 for ¥183.00 in FY3/2026 — a 1.6% increase, matching the guided rise in net profit exactly. On guided EPS of ¥371.40 that is a payout ratio of 50.1%.

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.