Tanseisha Co., Ltd. H1 FY2027 Earnings Analysis: Absorbing the Post-Expo Rebound While Maintaining High Profit Margins; On Track to Meet ¥8.0 Billion Operating Profit Target

1. Earnings Overview and Highlights

Tanseisha Co., Ltd. reported its consolidated financial results for the first half (H1) of the fiscal year ending January 2027, with net sales of ¥48.392 billion (down 13.7% YoY) , operating profit of ¥3.342 billion (down 40.5% YoY) , ordinary profit of ¥3.420 billion (down 39.7% YoY) , and net income attributable to owners of the parent of ¥2.333 billion (down 39.1% YoY) .

While the year-on-year decline in revenue and profit reflects the rebound effect following the completion of large-scale projects related to Expo 2025 Osaka, Kansai , which were concentrated in the same period last year, the results represent a significant improvement over the H1 FY2025 period (net sales of ¥41.024 billion, operating profit of ¥1.927 billion) before Expo-related contributions ramped up. This confirms that the company’s fundamental earnings base is steadily strengthening .

As shown in the P/L overview slide above, despite the decrease in net sales, the gross profit margin remained high at 20.0%, nearing the 20.5% recorded in the same period last year . In a challenging business environment characterized by persistent increases in construction costs, the company’s focus on selective order-taking and rigorous project cost management has proven effective. Selling, general and administrative (SG&A) expenses rose to ¥6.338 billion (up 8.0% YoY), primarily due to increased personnel costs (up ¥382 million YoY) resulting from a larger workforce and improved compensation, but progress against the full-year plan remains extremely solid.

---

2. Segment Performance and Business Environment

Performance across business segments in the first half showed a divergence: the Commercial and Other Facilities segment felt the impact of the Expo-related decline, while the Chain Store and Cultural Facilities segments successfully captured robust demand.

① Commercial and Other Facilities

• Net Sales: ¥29.522 billion (down 26.4% YoY)
• Segment Profit: ¥1.757 billion (down 65.0% YoY)
• Orders Received: ¥28.458 billion (down 12.4% YoY)

The segment experienced a significant decline in revenue and profit due to the completion of large-scale pavilion projects for the Expo 2025 Osaka, Kansai. However, driven by the recovery in inbound tourism and urban redevelopment, demand for space creation in hotels, station buildings, airport facilities, and stadiums remains firm , with steady inquiries continuing even after the lull in large-scale projects.

② Chain Store

• Net Sales: ¥13.743 billion (up 15.6% YoY)
• Segment Profit: ¥1.429 billion (up 63.5% YoY)
• Orders Received: ¥14.044 billion (up 3.7% YoY)

This segment achieved growth in both revenue and profit as new store openings and renovation projects for existing stores in the restaurant and specialty retail sectors became more active. The company’s industry-leading capabilities in construction and management for nationwide multi-store rollouts have been highly valued, allowing it to effectively capture strong renovation demand.

③ Cultural Facilities

• Net Sales: ¥4.875 billion (up 28.2% YoY)
• Segment Profit: ¥35 million (compared to a loss of ¥383 million in the same period last year)
• Orders Received: ¥6.039 billion (up 2.0% YoY)

The segment achieved a turnaround to profitability from the previous year’s loss, driven by an increase in projects for museums, corporate museums, and exhibition facilities. Leveraging its specialized think-tank functions and advanced production and technical capabilities, the company is successfully recovering profitability in this segment, where it holds a top-tier market share.

---

3. Order Trends and Response to Cost Environment

Consolidated orders received for the first half totaled ¥48.794 billion (down 6.5% YoY) , with an order backlog of ¥48.321 billion (down 5.4% YoY) .

The decline in orders is attributed to a tendency among clients to delay order placement and construction starts as they monitor the impact of rising construction costs, including materials and labor. However, client investment appetite remains intact, and measures are being taken to address concerns over material shortages caused by geopolitical tensions in the Middle East, keeping the underlying demand environment active.

The order backlog remains at a high level of over ¥48.3 billion, securing a substantial volume of work for the second half and the following fiscal year.

---

4. Financial Soundness and Cash Flow

The company maintains an extremely robust financial position. As of the end of H1 FY2027, net assets reached ¥38.305 billion , with an equity ratio of 70.4% (up 4.4 percentage points YoY) .

• Cash Flow from Operating Activities : Despite recording a profit before income taxes of ¥3.420 billion, operating activities resulted in a net outflow of ¥600 million . This was due to factors such as a decrease in accrued consumption taxes (-¥1.944 billion), an increase in costs on uncompleted construction contracts (-¥1.179 billion), and income tax payments (-¥1.758 billion), which offset the increase in trade payables (+¥2.001 billion).
• Cash and Cash Equivalents : The company maintains a balance of ¥14.332 billion , ensuring sufficient liquidity for agile business operations and human capital investment.

Furthermore, the company continues to invest in human capital for long-term growth, with the consolidated number of employees increasing from 1,564 in the same period last year to 1,673 (an increase of 109) . The company has built a structure comprising 325 planners/designers and 556 production staff (including 69 first-class architects and 285 first-class construction management engineers), enhancing its comprehensive design and construction capabilities.

---

5. Full-Year FY2027 Outlook

The full-year consolidated earnings forecast for FY2027 remains unchanged from the initial plan.

Key indicators for the full-year plan are as follows:

• Orders Received: ¥115.0 billion (up 14.7% YoY)
• Net Sales: ¥107.0 billion (down 0.2% YoY)
• Gross Profit: ¥21.25 billion (down 0.7% YoY, gross profit margin 19.9%)
• Operating Profit: ¥8.0 billion (down 4.3% YoY, operating profit margin 7.5%)
• Ordinary Profit: ¥8.1 billion (down 2.8% YoY)
• Net Income: ¥5.7 billion (down 4.9% YoY)
• EPS: ¥120.46 / ROE Target: 14.7%

Key Points for Achieving the Full-Year Plan

1. Second-Half Order Recovery and Large-Scale Project Contributions : In addition to the materialization of projects that were delayed in the first half, the company expects to secure large-scale projects for FY2028 and beyond , aiming to reach a record-high order volume of ¥115.0 billion.
2. Maintaining High Profitability : While net sales are expected to remain flat due to the post-Expo decline, the company plans to maintain high profit margins— a 19.9% gross profit margin and a 7.5% operating profit margin —through rigorous cost management and the provision of high-value-added space solutions.
3. Deepening Growth Areas : The company is pursuing stable growth through diversified business development, including the integration of advanced digital technology into space production, capturing renovation demand for chain stores, and the redevelopment of cultural facilities and tourism infrastructure.

By absorbing the temporary rebound effect of the Expo-related demand with stable fundamental earnings power, the company is steadily advancing its initiatives to enhance corporate value over the medium to long term.