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Summary of President's speech / Main questions and answers 2Q FY2014
Financial Results Briefing for the 1st half of Fiscal Year ending March 2015
Summary of President's speech
- At the phase of projecting the amount of new orders, we were predicting decline in demand due to rise in construction cost. However, the result was that we exceeded the target in both civil engineering and building construction by receiving large scale projects.
- The risk to worsening the profitability is reducing because of the strong stance to emphasize on profitability among the construction industry.
- The tightness in construction sites remain at high level. The strong demand is expected to continue, so we need to determine cautiously when taking new orders in accordance with our capacity.
- We exceeded the initial target by cost down and additional works although there was an expectation of a drastic drop in profitability compared to 1st half of previous fiscal year due to rise in construction cost of remaining works.
- The full year target is upwardly revised by the result of the 1st half of this fiscal year.
- Even in inflationary period, it is still possible to keep certain profit level by providing appropriate price with future anticipation through correct estimation.
- The current full year target of gross profit ratio in building construction is not satisfactory. We will try to improve profit level continuously.
- This fiscal year is the final year of “Medium-term Business Plan” which started in FY 2012.
- Since I assumed the presidency in 2007, I had difficulty to achieve the profit target set in business plan due to Lehman shock and low profitability in our overseas projects. But this time, the prospects for achieving the goal look brighter.
- The dividend which was reduced at once is back to 6 yen.
- Because of understanding and effort of each employee, it was possible to improve profitability by restoring the financial structure.
- I will undertake management to further improve the profitability.
Main questions and answers
- You have been selected as the potential contractor of technical corporation works of the New National Stadium. What is the future schedule?
- We are in the phase that our technical proposal has been specified.
We are going to work cooperatively on the business plan that suite client's budget.
- Prospects of construction cost in 2nd half of this fiscal year and impact on the profitability.
- The Labor cost is still rising, but the certain amount of risk is already incorporated in full year target.
- The peak of net sales.
- It is expected to be strong until 2019, right before the Olympics. There is a feeling that it will continue a little longer, but we need to look at the possibility of shrinkage of the market after 2020.
- The approach to overseas business and real estate development.
- We will not pull back from overseas business though domestic market is strong.
We need to keep accumulating manpower and know-how to deal with overseas projects after the Olympics.
In terms of investment on real estate development, we have it in our mind, but still, there are a lot to undertake on construction business as our main business.
- The standpoint for return to shareholders.
- It will be clarified in the new medium-term business plan which will start from next fiscal year.