Daiei Kankyo Q1 FY2027 Earnings Deep Dive: A Comprehensive Analysis of Significant Revenue and Profit Growth Driven by New Consolidation and Infrastructure Demand

Daiei Kankyo Co., Ltd. (Securities Code: 9336) delivered a remarkably strong start to the fiscal year in its Q1 FY2027 earnings results . The company achieved significant year-on-year growth in both revenue and profit , fueled by increased waste acceptance volumes in its core environmental business and the contribution of its newly consolidated subsidiary, Scarabe Sacre Co., Ltd.

This report extracts 10 key topics from the disclosed financial materials to provide an in-depth analysis of the company's performance trends, segment-specific drivers, the outcomes of strategic M&A, and future progress alongside shareholder return policies.

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1. Q1 FY2027 Earnings Highlights

Consolidated results for Q1 FY2027 (April–June 2026) showed revenue of 24,136 million yen (+20.6% YoY) , operating profit of 5,598 million yen (+31.4% YoY) , EBITDA of 8,778 million yen (+43.0% YoY) , and profit attributable to owners of the parent of 3,548 million yen (+22.1% YoY) .

As shown in the consolidated income statement above, the company recorded double-digit growth across all key metrics: revenue, operating profit, and EBITDA. Notably, the operating profit margin improved from 21.3% to 23.2% (+1.9pt) , and the EBITDA margin rose from 30.7% to 36.4% (+5.7pt) , confirming a significant enhancement in profitability. This improvement is attributed to an increase in high-margin waste acceptance projects and the efficient utilization of processing capacity.

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2. Analysis of Factors Affecting Consolidated Revenue and Operating Profit

A detailed breakdown of the Q1 growth reveals the synergy between favorable external conditions and proactive strategic investments.

• Revenue Variance (+4,116 million yen YoY):
  • Waste Treatment & Resource Recycling: +2,726 million yen. Driven by the consolidation of Scarabe Sacre and increased acceptance volumes resulting from infrastructure development projects in the Kansai region.
  • Soil Remediation: +997 million yen. Increased orders for landfill and washing treatments associated with large-scale developments.
  • Other: +345 million yen. Contributions from the M&A of Kouki Co., Ltd., and strong demolition contract orders by Kaisei Co., Ltd.
• Operating Profit Variance (+1,338 million yen YoY):
  • The revenue growth impact (+4,116 million yen) served as a powerful driver for profit.
  • Offsetting factors included increased depreciation and goodwill amortization (-1,301 million yen) following the acquisition of Scarabe Sacre, higher personnel costs (-469 million yen), increased energy and material costs (-116 million yen), and other costs such as outsourcing and transportation (-890 million yen). However, these were more than absorbed by the revenue growth.

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3. Trends in Acceptance Volumes and Segment Performance

Volume-based indicators, which underpin the financial performance, also show significant expansion.

As illustrated in the acceptance volume chart above, waste acceptance volume reached 682,000 tons in Q1 (+27.0% YoY) , a high level compared to previous quarters. Furthermore, contaminated soil acceptance surged to 158,000 tons (+200.6% YoY) , approximately triple the volume of the same period last year.

By business segment, total environmental business revenue reached 23,414 million yen (+21.0% YoY) , broken down as follows:

• Waste Treatment & Resource Recycling: 19,335 million yen (+16.4% YoY)
• Soil Remediation: 2,049 million yen (+94.9% YoY)
• Other (Environmental Related): 2,030 million yen (+20.5% YoY)

The rapid growth in soil remediation and the robust maintenance of waste treatment levels are clearly supporting the group's overall performance.

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4. Impact and Strategic Significance of the "Scarabe Sacre" Consolidation

One of the most significant topics in this quarter's earnings is the consolidation of Scarabe Sacre Co., Ltd.

As shown in the slide data above, Scarabe Sacre's standalone Q1 performance reached 1,364 million yen in revenue , 643 million yen in operating profit , and 703 million yen in EBITDA . Even after deducting amortization of goodwill and identifiable assets (421 million yen), it provided a net positive contribution of 287 million yen to consolidated operating profit and 955 million yen to consolidated EBITDA .

Furthermore, the full-year plan anticipates standalone revenue of 6,600 million yen and operating profit of 3,500 million yen, with a total full-year contribution to consolidated operating profit of 1,900 million yen and EBITDA of 4,900 million yen , making this a highly impactful M&A that strengthens the company's earnings foundation.

[Three Major Synergies of the Scarabe Sacre Consolidation]

1. Expansion of Business Area: Secured new final disposal sites in the Kyushu/Okinawa region, strengthening wide-area operations.
2. Dramatic Expansion of Disposal Capacity: Acquired vast final disposal sites with a permitted capacity of 8,817,000 m³ and a remaining capacity of 7,041,000 m³ , ensuring the landfill capacity needed to achieve the "D-Plan 2028" medium-term management plan.
3. Realization of Logistics Efficiency: Possession of dedicated berths enables efficient waste acceptance from wide areas using maritime transport.

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5. Progress Against Plans and Segment Status

Progress toward the full-year and first-half performance targets for FY2027 is excellent.

• Against First-Half Targets (Revenue 46,300 million yen, Operating Profit 11,300 million yen):
  • Revenue Progress: 52.1%
  • Operating Profit Progress: 49.5%
  • EBITDA Progress: 50.5%
• Against Full-Year Targets (Revenue 93,900 million yen, Operating Profit 24,300 million yen):
  • Revenue Progress: 25.7%
  • Operating Profit Progress: 23.0%

Given that construction and infrastructure-related waste trends typically skew toward the second half of the year, achieving over 50% of the first-half plan in Q1 suggests a high degree of certainty in meeting the targets. Additionally, the core environmental business showed a 52.2% progress rate in revenue, while the "Other" segment, including recyclable resources, saw segment profit progress reach 253.0% due to improved margins, indicating company-wide efficiency gains.

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6. Shareholder Return Policy and Dividend Trends

The company places high importance on balancing growth investment with shareholder returns and maintains a clear dividend policy.

• Dividend Policy: Maintain a consolidated dividend payout ratio of 33% or higher during the medium-term management plan period (FY2026–FY2028).
• Introduction of Progressive Dividends: Adopted a progressive dividend policy aiming to maintain or increase dividends without reducing them, ensuring sustainable and stable returns.
• FY2027 Dividend Forecast: Planned at 55 yen per share annually (27.5 yen interim, 27.5 yen year-end). This is a 2 yen increase from the previous year's 53 yen, with an expected payout ratio of 33.5% .

The company has indicated its willingness to consider additional shareholder returns in line with earnings growth, reflecting a strong commitment to shareholder value.

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7. Competitive Advantages and Mid-to-Long-Term Growth Strategy of the Daiei Kankyo Group

The Daiei Kankyo Group maintains a high market share and profitability in the resource recycling market due to the following five core advantages :

1. One-Stop Service: Completes the entire process from collection and transportation to intermediate treatment, recycling, and final disposal within the group.
2. Diversified Customer Base: Not dependent on specific clients, with a broad base including local governments (approx. 20% of revenue), general contractors (approx. 35%), and manufacturers (approx. 30%).
3. Overwhelming Processing Capacity: Possesses industry-leading thermal treatment facilities and numerous final disposal sites with vast remaining capacity.
4. Strong Collaboration with Local Governments: Holds permits for municipal waste treatment at approximately 70% of its facilities and has established business relationships with about 27% of local governments nationwide.
5. Extensive M&A Track Record: 31 out of 47 consolidated subsidiaries originated from M&A, blending organic and inorganic growth at a high level.

[Progress on Key Future Initiatives]

• Recycling Facilities: The "Plastic Recycling Facility" began full-scale operation in April 2026.
• Governance Structure: Transitioned to a new structure in April 2026, with Morihiko Shimoda appointed as Representative Director and President in June.
• Public-Private Partnership (PPP/PFI): Expanding public sector contracts, including the start of construction in Aioi in August 2026.

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Summary

Daiei Kankyo's Q1 FY2027 earnings were exceptionally strong, driven by the resilience of the existing environmental business , the capture of Kansai infrastructure demand , and the M&A effects of Scarabe Sacre . With a high progress rate against plans, a solid financial foundation, and a clear shareholder return policy, the company's progress in its growth strategy toward building a resource-recycling society remains a key point of focus.