【Ibokin H1 FY2026 Earnings Analysis】Operating Profit Surges 135.2% YoY Driven by High Scrap Prices and Complex Demolition Projects

Ibokin Co., Ltd. (Securities Code: 5699) has released its financial results for the first half of the fiscal year ending December 2026 . This report provides a detailed analysis of the company's interim performance highlights, factors behind profit fluctuations, segment-specific performance, financial structure, and future growth strategies, including the strategic business alliance with Mitsui & Co.

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1. H1 FY2026 Earnings Highlights

For the interim period, the company reported consolidated net sales of 4,905 million yen (up 6.1% YoY) , operating profit of 434 million yen (up 135.2% YoY) , ordinary profit of 430 million yen (up 120.6% YoY) , and net income attributable to owners of the parent of 287 million yen (up 60.3% YoY) . In addition to steady growth in net sales, major profit indicators showed significant year-on-year expansion.

Key drivers included ferrous scrap market prices, which remained approximately 19% higher than the same period last year , and the steady progress of high-difficulty, large-scale demolition projects. The company successfully achieved a substantial increase in operating profit, effectively absorbing factors such as the absence of negative goodwill recorded in the previous fiscal year (FY2025) following the acquisition of Mitsue Co., Ltd., as well as increased interest expenses related to capital investment.

The following graph illustrates the company's performance trends over the past few years and the full-year forecast for the current period.

Slide Commentary (Performance Trends)

The slide above (Page 4) visualizes the trends in Ibokin's consolidated net sales (by segment) and consolidated ordinary profit from FY2021 through the first half of FY2026. Looking at the sales composition, the company operates across three pillars: "Demolition," "Environmental," and "Metal" businesses, which have collectively driven revenue to the 10 billion yen scale in recent years. Notably, ordinary profit reached 430 million yen in the first half of FY2026 , representing extremely smooth progress toward the full-year target of 778 million yen . Net sales are also trending strongly, particularly in the metal business, toward the full-year forecast of 10,500 million yen.

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2. Segment Performance and Factor Analysis

The company's operations are divided into three segments: "Demolition," "Environmental," and "Metal." The performance of each segment during the interim period is as follows:

① Demolition Business (Net Sales: 1,133 million yen / down 20.0% YoY)

While revenue declined due to a sluggish start in new projects, the segment achieved profit growth . This was driven by the absence of significant construction costs recorded for specific projects in the previous year, combined with the steady progress of high-difficulty, large-scale demolition projects . The agile deployment of specialized ultra-large demolition machinery contributed to improved profit margins.

② Environmental Business (Net Sales: 1,133 million yen / up 13.9% YoY)

This segment achieved revenue growth as both the volume of industrial waste treatment contracts and the sales of recycled resources remained solid. However, segment profit declined due to the reactionary effect of a large-scale, high-margin waste treatment project involving valuable materials that occurred unexpectedly in the same period last year.

③ Metal Business (Net Sales: 2,638 million yen / up 19.3% YoY)

Although trading volumes were soft in some areas, the high level of ferrous scrap prices compared to the previous year and a significant rise in copper scrap prices acted as strong tailwinds. As the core business accounting for 53.8% of total sales, it achieved substantial growth in both revenue and profit .

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3. Analysis of Operating Profit Fluctuations

The surge in operating profit from 184 million yen in the previous year to 434 million yen—an increase of +250 million yen (+135.2%) —reflects the interplay between segment performance and changes in the cost structure.

Slide Commentary (Operating Profit Fluctuation Analysis)

The slide above (Page 7) uses a waterfall chart to illustrate the factors behind the changes in operating profit, which is crucial for understanding the strengths of the company's current earnings structure. Factors contributing to lower profit included increased labor costs due to a rise in headcount (△19 million yen) , higher depreciation expenses from the introduction of ultra-large demolition machinery (△40 million yen) , and increased SG&A expenses (△71 million yen) . However, these cost increases were far outweighed by revenue growth and improved gross margins (+374 million yen) . This demonstrates that the surge in scrap prices and improved profitability in demolition projects generated profit-making power that more than absorbed the investment costs.

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4. Financial Position and Balance Sheet Characteristics

Total assets at the end of the first half of FY2026 stood at 8,395 million yen (an increase of 290 million yen from the end of the previous fiscal year).

• Current Assets : Cash and deposits increased significantly to 2,275 million yen (up 602 million yen from the end of the previous fiscal year) . This was primarily due to the completion of capital investments and the collection of trade receivables (notes and accounts receivable) following the completion of large-scale projects.
• Non-current Assets : Property, plant, and equipment stood at 3,540 million yen (down 140 million yen from the end of the previous fiscal year), reflecting progress in efficient asset management.
• Liabilities and Net Assets : As a result of debt repayment, non-current liabilities decreased to 1,421 million yen (down 177 million yen from the end of the previous fiscal year). Net assets reached 5,392 million yen (up 245 million yen from the end of the previous fiscal year), maintaining a robust financial position with an equity ratio of 64.2% .

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5. Full-Year Forecast and Shareholder Return Policy

Full-Year FY2026 Earnings Forecast

The company has maintained its initial full-year consolidated earnings forecast.

• Net Sales : 10,500 million yen (up 4.9% YoY)
• Operating Profit : 800 million yen (up 24.4% YoY)
• Ordinary Profit : 778 million yen (up 17.0% YoY)
• Net Income Attributable to Owners of the Parent : 524 million yen (down 12.4% YoY)

For the second half, the company expects corporate production activities and demand for equipment renewal to gradually recover. Regarding market conditions, while scrap demand is expected to increase in the medium-to-long term due to the shift toward electric furnace steelmaking driven by decarbonization, the company anticipates that prices will remain at current levels in the short term.

Shareholder Returns (Dividend Policy)

The company's policy is to maintain stable dividends while considering the need for retained earnings to support future business development and strengthen its financial foundation. The annual dividend per share for FY2026 is projected at 32.0 yen , consistent with the stable dividend levels of the previous two fiscal years.

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6. Medium-to-Long-Term Growth Strategy and Topics

Ibokin leverages its one-stop service model across its Demolition, Environmental, and Metal businesses, positioning the Demolition business as its "growth engine" and the Environmental and Metal businesses as its "stable management foundation." Key topics are as follows:

① Strategic Business Alliance with Mitsui & Co. (MOU)

A critical stepping stone in the company's medium-to-long-term growth story is the business alliance with Mitsui & Co. , a major general trading company.

Slide Commentary (Business Alliance with Mitsui & Co.)

The slide above (Page 15) outlines the strategic business alliance (MOU) with Mitsui & Co. aimed at building a stable supply system for metal scrap. Through this partnership, Ibokin will be able to participate in large-scale demolition projects held by the Mitsui & Co. group and its customer base . Furthermore, the collaboration goes beyond simple scrap collection and recycling; it includes joint research on supporting the venous industry, such as soil improvement projects, and the efficient and stable supply of metal scrap generated from demolition projects to major steel manufacturers. By integrating Ibokin's demolition and recycling technology with the extensive network of a general trading company, the firm expects to secure large-scale orders and revitalize its earnings base.

② Strengthening Construction Capabilities and Technology Development

• Development of Ultra-Large Machinery and Pile Extraction Methods : The company has developed a proprietary pile extraction method (patent pending) using ultra-large machinery to remove underground piles that were difficult to extract with conventional methods. This has led to a surge in inquiries due to improved safety and efficiency. In September 2025, the company completed the introduction of its second ultra-large specialized demolition machine , further enhancing its capacity for complex, large-scale projects.
• Synergy from Mitsue Acquisition : The company is promoting the strengthening of construction systems within Hyogo Prefecture and the in-house execution of asbestos removal work.

③ Facility Expansion and Talent Acquisition

• New Plant Construction Plan in the Hanshin Area : The company has acquired approximately 900 tsubo of land in Suminoe-ku, Osaka, and is preparing for an opening within FY2027 . This will address the high utilization rate of the Hanshin Office (Amagasaki City), cover the southern Osaka area, and coordinate with the Tatsuno City plant.
• Recruitment of Foreign Talent : To address labor shortages in construction and transportation, the company is hiring overseas talent from Indonesia. The company aims to scale this to 16 personnel by the end of FY2026, ensuring diversity and stabilizing its construction workforce.

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Summary

In the first half of FY2026, Ibokin achieved a more than two-fold increase in operating profit year-on-year , supported by favorable scrap market conditions and the company's technical and construction capabilities in the demolition business. Moving forward, the company plans to shift toward a "knowledge-intensive industry" spanning from demolition to resource recycling through internal facility expansion, heavy machinery investment, deepening its partnership with Mitsui & Co. , and the opening of a new plant (scheduled for FY2027) .