Will the sharp increase in order intake translate into first-half sales and backlog?

In the first quarter of FY2027, order intake rose 314.6% year on year to ¥14,457 million, while sales fell 20.7% to ¥5,340 million. The opposite directions of orders and sales are clear, but the company has not disclosed an explanation by order project that would establish whether the sharp increase in order intake translated directly into sales in the quarter. In the first half, it will be necessary to examine not only order volumes, but also construction progress and the timing of revenue recognition.

Order intake in FY2026 was ¥29,488 million, and carried-over construction contracts at year-end totaled ¥44,105 million. First-quarter order intake of ¥14,457 million is equivalent to approximately 49.0% of the previous full-year order intake, but the quarter and full year cover different periods, so this ratio alone cannot be used to assess achievement of the full-year order forecast. The order backlog was not disclosed in monetary terms for the first quarter, so it is not possible to determine how much it changed from ¥44,105 million at the end of the previous fiscal year or how much of order intake remains as carried-over construction contracts.

Sales comprised ¥5,332 million from the construction business, down 18.9% year on year, and ¥8 million from the real estate business, down 6.8%. No breakdown of order intake by segment, type of construction or project size was provided, so it is unclear whether the ¥14,457 million increase resulted from a large project or the accumulation of multiple projects. Next time, in addition to checking for a recovery in construction sales, it will be important to see whether order intake and backlog are disclosed by segment or construction progress.

The company describes both public- and private-sector construction investment as firm, while citing persistently high construction-material prices and labor costs, as well as shortages of construction engineers and skilled workers, as industry constraints. Accordingly, the key issue for the first half will be whether sales recognition is delayed despite high order intake, or whether sales are being constrained by selective order acceptance focused on profitability. If the cumulative first-half sales, order intake and backlog, together with construction progress and the contribution from large projects, are explained, the achievability of the full-year sales forecast of ¥27,200 million can be assessed more specifically.