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Summary of President's speech / Main questions and answers 2Q FY2016
Financial Results Briefing for the 1st half of Fiscal Year ending March 2017
Summary of President's speech
- Taisei Corporation is exerting every efforts on restoration work in relation with the accident on November 8, 2016 at extension work of Fukuoka City Subway Nanakuma Line that is under construction by the joint venture with Taisei Corporation as the representative.
- The cause of the accident is now under investigation, therefore, impact of the accident to the business performance is unknown at this moment. The effect of the accident is not included in the revised forecast that is announced.
- We will disclose any information concerning the impact to the business performance timely and appropriately.
- Non-consolidated domestic civil engineering increased by 20% on year-on-year basis because of strong orders of transport infrastructure construction in public sector. Non-consolidated domestic building construction also increased by 9% on year-on-year basis due to favorably receiving new orders of large scale projects that have been our focused projects.
- Recently, the construction companies are requested by the clients to be involved in the projects from planning phase to settle the problems such as schedule and cost. It appears that this trend will continue.
Prospect of profit
- Regarding consolidated profit, gross profit and other profit items continued to record an all-time high record followed the same period of last fiscal year because of acquisition of additional works and cost reduction. In full year revised forecast, gross margin ratio of both civil engineering and building construction of the second half of FY2016 seem to fall from that of the first half, we expect for certain improvement by decline of risk factors such as labor cost and material cost, and acquisition of additional works.
- In recent meeting with overseas investors I explained about the projection of Post-Olympic that “projects that will continue after 2020 are becoming more specific”, “regardless of engineers and workers, there is less possibility that industry capacity to be excess structurally so, unit construction price especially labor cost will remain at high level”, “therefore, it is unlikely that price competition to recur by seeking for the amount of projects”.
- Even in peak period toward 2020 from next fiscal year, it is Taisei’s duty to take initiative to solve the industry’s common concern such as improvement of labor condition of workers and also, increase the attractiveness of construction industry for younger people by upgrading production system including automation and ICT. I brace myself and put best efforts to manage the company with the duties in mind.
Main questions and answers
- What is the prospect of the building construction gross margin ratio? Can we expect for further improvement?
- I think that we can maintain the current level although it may fluctuate a little depending on the timing of rise in labor cost.
In the busy time toward 2020 Olympic, various measures to improve productivity may be invented and we expect these measures to lead to the improvement of the future profitability.
- What is the perspective of the overseas business.
- The overseas business is the important market to support the domestic market. The examination committee have been put in place headed by myself.
I would like to work on well-considered and managed projects such as projects from Japanese companies expanding to overseas and infrastructure export.
- What is the probability of continuous share repurchase.
- There is no change in recognition that we have many number of shares issued. We think shareholder return is matter of the balance of the investment but now is not right time for domestic real estate investment, etc. The continuity of share repurchase will be appropriately decided depending on the situation.
- In the meeting with overseas investors, what kind of topic were they most interested in?
- Every investors had questions about “problem with engineer and labor shortag”, “prospect of domestic market after Olympic”, and “long-term vision and strategies”.
- Please comment on the accident at extension work of Fukuoka City Subway Nanakuma Line.
- We are exerting every efforts on restoration work such as road and utilities and to investigate the cause of the accident with those concerned.