Construction Technology Research Institute Co., Ltd. 63rd Fiscal Year (2025) Financial Results Briefing Q&A Summary

Overview of Performance

Operating income for the 63rd fiscal year (2025) fell short of the plan by approximately 900 million yen. The main factors were increased SG&A expenses and delays in orders for large projects at Overseas Construction Technology Research International, which caused non-productive time among engineers, thereby raising the cost ratio. The SG&A increase was impacted by approximately 350 million yen in one-time expenses due to lower overseas business utilization rates (including about 100 million yen in M&A expenses and 100 million yen in indemnity insurance) as well as permanent cost increases due to personnel additions. In the domestic construction consulting business, engineer recruitment was generally in line with the plan and working hours decreased, with no order restrictions imposed.

Outlook and Capital Efficiency

The backlog of uncompleted orders has increased compared to the previous fiscal year, which is expected to contribute to higher sales and profitability next fiscal year. The policy is to avoid accepting low-profit projects unless there is future potential, with risk assessment meetings evaluating risks including profitability. Although ROE has not reached target levels due to declining profitability and special losses, priority is being given to securing profitability and growth investments. Going forward, investment management conscious of capital efficiency and possible reduction in net assets size will be considered. Measures to improve overseas business utilization include pre-adjustments for engineer dispatch and optimized job allocation domestically.