Obayashi Corporation has significantly raised its full-year financial forecasts, citing strong performance in its domestic building and civil engineering sectors, alongside gains from overseas subsidiaries and real estate sales. The revised projections, announced on , point to a year of robust profitability for the Japanese construction giant.
Revised Financial Outlook
The company now anticipates net sales of JPY 2,570,000 million for the fiscal year ending – a figure unchanged from its previous forecast. However, Obayashi dramatically increased its profit expectations. Operating income is now projected to reach JPY 195,000 million, an 18.2% increase from its earlier estimate. Ordinary income is expected to be JPY 205,000 million, up 19.2%, and profit attributable to owners of parent is forecast at JPY 170,000 million.
These upward revisions are attributed to a combination of factors. According to the company, higher gross profits on completed construction contracts within Japan have been a key driver. This improvement stems from rigorous cost reduction measures and the successful negotiation of additional change orders on projects nearing completion. Obayashi highlighted enhanced profitability from its international construction operations and the positive impact of recent development property sales.
Dividend Increase Reflects Strong Performance
Reflecting its improved financial outlook, Obayashi has also increased its year-end dividend forecast. The company will now distribute JPY 46.00 per share, up from a previously announced JPY 41.00. This brings the total projected annual dividend to JPY 87.00 per share, an increase from JPY 82.00. Obayashi stated that this dividend policy aims to maintain a dividend on equity ratio of approximately 5%.
Recent Performance and Context
The revisions build on positive momentum demonstrated in the first three quarters of the fiscal year. Yahoo! Finance reported that Obayashi’s consolidated operating profit for the period from , to , increased by 46.2% year-over-year, reaching JPY 142.7 billion.
Earlier revisions to financial forecasts were made on , for the fiscal year ending . Those revisions already indicated positive trends, with forecasts for net sales increasing to JPY 2,620,000 million, operating income to JPY 143,000 million, and profit attributable to owners of parent to JPY 145,000 million. The latest adjustments for the current fiscal year represent a further acceleration of this positive trajectory.
Financial Details and Comparison to Previous Year
A comparison to the fiscal year ended , reveals substantial growth. Net sales are projected to be JPY 294.837 billion higher than the previous year, while operating income is expected to increase by JPY 63.618 billion. Ordinary income is forecast to be JPY 60.484 billion higher, and profit attributable to owners of parent is projected to rise by JPY 69.940 billion. These represent percentage increases of 12.7%, 80.1%, 66.1%, and 93.2%, respectively.
On a non-consolidated basis, Obayashi also revised its forecasts upward. Net sales are now expected to reach JPY 1,660,000 million, up from JPY 1,650,000 million. Operating income is projected at JPY 89,400 million, compared to JPY 85,000 million previously forecast, and ordinary income is expected to be JPY 98,600 million, up from JPY 95,000 million. Profit attributable to owners of parent is now forecast at JPY 115,700 million, a significant increase from the earlier estimate of JPY 98,000 million.
Implications for Investors and the Construction Sector
Obayashi’s revised forecasts signal confidence in the company’s ability to capitalize on favorable conditions in the Japanese construction market. The increased dividend payout is likely to be welcomed by investors. The company’s success in securing change orders and controlling costs demonstrates effective project management and operational efficiency. The strong performance of its overseas subsidiaries also highlights the benefits of its international diversification strategy.
The upward revisions come as the Japanese construction sector faces ongoing challenges, including labor shortages and rising material costs. Obayashi’s ability to navigate these headwinds and deliver strong financial results positions it favorably within the industry. The company’s performance may also serve as a benchmark for other Japanese construction firms as they report their own earnings in the coming months.
