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Summary of President's speech / Main questions and answers 2Q FY2010

Financial Results Briefing for 1st half of the fiscal year ending March 2011

Summary of President's speech

Present market situation and orders to date

  • Despite the expectation at the beginning of the fiscal year that private demand in the domestic market would increase as the Japanese economy recovered, only a small number of postponed projects were restarted. Given the current economic slowdown and the fact that many Japanese companies are currently increasing their overseas investment ratios, Japan will inevitably experience a reduction in domestic investment.
  • Considering the economic situation, we actually received a relatively large number of orders in Japan during the interim period, but the total number of orders, including those for overseas and development projects, fell slightly short of our target. However, the decrease in revenue from overseas projects is mostly a result of a reduction in the monetary value of ongoing projects caused by a rapid increase in the value of the yen. Considering the above circumstances, we have generally achieved the numerical target for this quarter.
  • Although we are likely to continue to face difficulties in obtaining new orders, we will strive to increase the number of orders for both additional work and renewal work in order to achieve our targets for this fiscal year.

Policy aimed at maximizing profits

  • As a result of our policy aimed at maximizing profits, our gross profit rate in Japan has increased. We are adopting a more conservative approach overseas.
  • Going forward, we will maintain the maximization of profit as our basic policy.

State of overseas projects

  • Since demand in the domestic market is unlikely to increase in the near future, we have no choice but to seek opportunities in overseas markets in order to maintain and expand our business. To that end, we must develop effective measures to manage risk.

Future business development

  • Based on our recognition of the need to improve our financial position, we will strive to reduce interest-bearing debts and increase our earned surplus. At the same time, we will continue to invest in the overseas and environmental projects that were listed as major areas of focus in our mid-term business plan.
  • In order to make overseas and environmental projects one of our principal business competencies, we will take an active role in future-oriented personnel training as well as research and development.

Main questions and answers

I would like to ask a question about Taisei's policy on profits and orders. Do you intend to increase the number of orders despite the difficult market conditions expected for the next fiscal year and beyond, or do you think you have already achieved your target?
We are focused more on increasing profits than increasing the number of orders per se.
We would like to achieve our target number of orders in order to maximize profits.
Since the beginning of the fiscal year, other construction companies have upwardly revised their forecasts regarding the profit ratio of their civil engineering businesses. Why has Taisei downwardly revised its forecast?
Civil engineering projects generally take a long time to complete, and our ongoing projects include some that were started back when we were working to increase the number of orders. These projects reduce the overall profit ratio.
However, since these ongoing projects are gradually being completed, the profit ratio will eventually improve.
As a general contractor, what is your policy concerning infrastructure export projects?
We would like to participate in such projects from the initial stage in order to make the most of our advanced technology.
How do you plan to increase the value of your company's stock?
Increasing profits per share is paramount. To this end, we believe we must continue to produce profits throughout the business cycle.