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Summary of President's speech / Main questions and answers 4Q FY2014

Financial Results Briefing for the fiscal year ended March 2015

Summary of President's speech

New orders and prospect of profit

  • The amount of new orders in both civil engineering and building construction exceeded the result of previous fiscal year and the initial plan. There are two reasons for this; one is that we received several large scale projects and the other, increase in unit price of construction cost by inflation of cost.
  • Although rise in construction cost is leveled off, orders of large scale projects mainly in private sector is expected to continue after the current fiscal year.
  • The gross profit of construction business in previous fiscal year exceeded the initial plan, and further improvement is expected in current fiscal year.

Market outlook

  • The projects which are large and require high technical knowledge are scheduled to be ordered. These include Olympic related facilities and Linear Chuo Shinkansen. The favorable situation will continue for some time for construction companies with strength in technology, planning and proposal, and procurement.
  • Behind the strong demand, there are projects that are put off due to cost rise. These projects are expected to hold the construction market after the Olympics.

Near-term action

  • In the next three years, we will promote the conversion of a business structure for creation of higher added value, which is necessary for future growth, by participating in National Projects.
  • In current busy situation, it is not easy to drive the above mentioned factor, but with my initiative, we will perform each tasks set in Medium-term Business Plan to connect to the result steadily.

Main questions and answers

Q:
Measures to further enhance profit?
A:
We will focus on sales activity to take new orders which lead to net sales after the Olympics (2020). In particular, promotion of next generation technological development and establishment of next generation business models in fields such as renewal and replacement, nuclear power, environment, engineering, and urban redevelopment to provide our customer with high added value.
Q:
The forecast of consolidated net income in FY2015 will exceed the maximum level in FY1991. What is the difference in business environment now and the past?
A:
In FY1991, the sales volume was 30% higher than now, and building specification and unit price was also high. Although the productivity is increasing compared to the past, the number of employees is decreased by 40%, so we have a feeling that degree of busyness is increasing.
Q:
It appears there is no plan of new investment against the large real estate development property sold in before the previous fiscal year. What is your future investment stance?
A:
It is difficult to actively invest in current domestic real estate market. In terms of sale of development inventory, we will make individual decision by considering business potential.
Q:
In FY2014, the consolidated operating income finished with the result of 70.4 billion yen, which was higher than the initial plan, 40.7 billion yen at the beginning of fiscal year. Would it be the same in current fiscal year and end with much better result than the initial plan, 68.0 billion yen?
A:
At the beginning of previous fiscal year, there was strong anxiety about future construction cost. However, this fiscal year, we are less uncertain about business environment than previous fiscal year.
Q:
The backlog of domestic civil engineering is increasing. Is there timing in the future when the net sales to increase drastically in the future?
A:
Unlike new orders, net sales is increased by percentage of completion method which is strictly connected with our capacity. It is improbable for net sales to increase sharply on a temporary basis.