JGC Raises Operating Profit Forecast 10% Despite 10.5% First-Half Sales Decline

Key Facts

JGC Holdings raised its operating profit forecast for the fiscal year ending in March 2027 to 44 billion yen from 40 billion yen after announcing first-half results on November 11, 2026. Net sales totaled 341.308 billion yen for the period from April 1 to September 30, down 10.5% from the same period a year earlier. Sales declined even as operating and ordinary profit improved sharply, prompting the company to revise its full-year profit forecasts. It also raised its net profit estimate to 50 billion yen from 46 billion yen and its ordinary profit estimate to 57 billion yen from 46 billion yen. The company left its full-year sales forecast unchanged while raising its expected profit margin. The revisions reflect improved profitability from project execution, while first-half sales remain below their level a year earlier.

Operating profit was 24.598 billion yen in the first half, up 56.0% year on year, while ordinary profit rose 69.2% to 35.769 billion yen. Earnings per share climbed to 142.77 yen from 48.24 yen in the same period a year earlier. The gross profit margin was 12.0%, compared with 7.9% a year earlier, an improvement of 4.1 percentage points. Net sales, meanwhile, totaled 341.308 billion yen, compared with 381.254 billion yen in the previous first half. The figures highlight the widening gap between revenue and profit trends during the period. The company attributed the engineering segment's performance to steady execution of domestic and overseas projects and the impact of exchange rates.

JGC said engineering segment profit exceeded its expectations, supported by steady project execution and the impact of a weaker yen, despite continuing risks from conditions in the Middle East and higher contingency budgets related to construction plan changes. The company said the completion of several large overseas projects, or their arrival at final stages in the previous fiscal year, weighed on year-on-year sales. At the same time, it said project execution remained steady and the weaker yen supported engineering segment profitability. Net profit also tripled year on year, the company said, supported by improved profitability, currency effects and a gain on the sale of Swing Corp. The company recorded a gain of 19.935 billion yen from the sale of securities during the first half. These factors formed the backdrop to the higher full-year profit forecasts, with the sales forecast unchanged.

JGC listed the refurbishment of a refinery and gas plant in Japan, as well as a floating liquefied natural gas project in Mozambique, among new contracts during the first half. Major projects under execution included gas recovery and carbon capture and storage facilities in Indonesia, a low-carbon liquefied natural gas facility in the UAE, a gas separation expansion in Saudi Arabia and a refinery upgrade in Iraq. New engineering contracts totaled 172.634 billion yen during the period. Outstanding contracts fell to 1.011 trillion yen as of September 30, from 1.156 trillion yen as of March 31, 2026. The company continues to execute projects in Saudi Arabia, Iraq and the UAE, with stakeholder safety a top priority. It said the impact of conditions on raw-material procurement for its functional materials manufacturing segment remained limited as of that date.

Cash flow from operating activities turned positive, reaching 16.251 billion yen in the first half, compared with an outflow of 7.578 billion yen in the same period a year earlier. The change offers an additional indicator alongside improved profit and margins, while sales remained below their previous level. JGC said the accounting period for subsidiary PT. JGC Indonesia, included in second-quarter results, covered nine months following a change to its fiscal year-end. The company said the impact of the change was reflected in the consolidated income statement. Its forecasts are based on an exchange rate of 150 yen per dollar, while the presentation cited an average of 159.88 yen per dollar in the previous fiscal year's results. The exchange rate remains among the assumptions included in the company's current fiscal-year forecasts.

JGC kept its net sales forecast for the fiscal year ending in March 2027 at 670 billion yen, but raised its expected profit margin to 11.5% from 10.9%. The revisions indicate that the forecast update focused on profit and margins, rather than an increase in estimated annual revenue. The company also forecast annual dividends of 52 yen per share for the fiscal year and announced no change to its latest dividend forecast. Its investor relations calendar listed second-quarter results on November 11, 2026. The calendar available did not show a later announced date for results. The current forecasts, including the dividend level, remain the latest disclosed by the company.