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Since founded in 1873, the Taisei Group has worked on numerous projects while adapting to the changes of Japanese society, including modernization, postwar reconstruction, economic growth, and globalization. At the same time, our Group has been involved in the development of safe, secure and attractive cities and the development of social capital, and contributed to restoration and reconstruction from large-scale natural disasters and the building of the national resilience of Japan.By so doing, we have fulfilled our social responsibility as a member of the construction industry.
Building on this background, our Group recently established our 10-year plan: TAISEI VISION 2030. In order to be “a pioneering corporate group contributing to the development of a resilient society where people can live affluent and cultural lives,” and pursuing the Group Philosophy “To create a vibrant environment for all members of society,” we will strive to build a global society filled with dreams and hopes.

Reviewing the Previous Medium-Term Business Plan (2018–2020)

In fiscal 2020, the Japanese economy continued to be in a tough situation overall. As the COVID-19 pandemic had a significant impact on the global economy, corporate earnings have been weak mainly in non-manufacturing sectors, and uncertainty over the employment and income situations has been protracted. In the construction industry, while public investment was steady, private capital investment declined due to poor corporate performance, and construction investment remained at a level lower than the previous year. The situation for the Taisei Group also continued to be difficult. In addition to the pandemic, the competitive environment became fiercer due mainly to a downturn after completion of the projects related to the Tokyo 2020 Olympic and Paralympic Games.
In this business environment, we achieved some of the targets set in the Medium-Term Business Plan (2018–2020), such as those for the dividend payout ratio and interest-bearing debt, but regrettably failed to achieve the targets for the final year in terms of sales and profits.

Summary of Previous Medium-Term Business Plan (2018–2020)

Medium-Term Business Plan (2018–2020) Numerical Management Targets

(Billions of Yen) FY2020
Medium-Term Business Plan target
FY2018
results
FY2019
results
FY2020
results
Net sales ¥1,870.0 ¥1,650.9 ¥1,751.3 ¥1,480.1
Operating income ¥187.0 ¥153.3 ¥167.8 ¥130.5
Net income attributable
to owners of parent
¥130.0 ¥112.6 ¥122.1 ¥92.6
ROE 12% or higher 16.2% 16.6% 11.6%
Dividend payout
ratio
About 25% 25.4% 22.7% 29.4%*
Interest-bearing debt Less than ¥300.0 billion ¥217.4 billion ¥208.1 billion ¥219.0 billion*
Net interest-bearing debt (Maintaining permanent state
of substantive debt-free management)
¥(250.3) billion ¥(274.5) billion ¥(275.3) billion*
Capital-to-asset
ratio
40% or higher 39.0% 39.7% 44.9%*

* Achieved the targets under Medium-Term Business Plan (2018–2020).

Medium- to Long-Term External Environment and Structural Changes

The Taisei Group has identified medium- to long-term external environment and structural changes that will occur in the coming ten years, such as the evolution of sustainability management based mainly on Sustainable Development Goals (SDGs) to be achieved by 2030 and business model transformation utilizing data and digital technologies, as three “X's” (transformations). We think that these three X's will force our Group to transform itself as they interact with one another.

[IX] Industry Transformation

The first is a structural problem of the construction industry; simply put, it is industry restructuring. As the construction market matures, competition is expected to remain harsh if the current number of construction companies does not decline. Also, in terms of the industry structure, securing a labor force has become an urgent issue as Japan's population ages and the birthrate declines.
Against this background, we think that a certain level of restructuring is necessary for the construction industry to develop as an attractive industry, fulfilling the missions demanded by society, such as the development and maintenance of infrastructure that is essential for social life and the provision of an abundant living environment.
In order to independently respond to this momentum of industry restructuring, our Group aims to expand its business scope through M&A with the objective of tapping into sectors with future growth potential, and of overcoming sectors and areas in which Taisei Corporation has weakness.

[SX] Sustainability Transformation

The second is response to the issue of sustainability, as represented by such themes as SDGs and ESG. The issues of carbon neutrality, climate change, and diversity and inclusion have attracted much attention globally in the past year. They are now commonly understood as issues not only for Japan, but also for the entire world. It has become a major challenge for our Group to resolve these issues in connection with, not separately from, our business, and carry the challenge to our sustainable growth and enhancement of our corporate value.

[DX] Digital Transformation

The third is response to digital transformation. In the construction industry, utilization of digital technologies and data is still in the process of development. If our Group can quickly adopt DX across the entire business and achieve a drastic improvement in productivity of on-site production process, swifter decision-making, and creation of new services, we will acquire a dominant competitive strength. Conversely, however, it is our recognition that the time will come soon when we cannot beat the competition without proceeding with DX.

Explanatory Chart of TAISEI VISION 2030 and Medium-Term Business Plan (2021–2023)

Explanatory Chart of TAISEI VISION 2030 and Medium-Term Business Plan

TAISEI VISION 2030

In pursuing sustainable growth going forward, it is important for our Group to determine how to respond to medium- to long-term external environment changes and structural changes. In addition, it is also crucial for all Group employees to strive to realize our vision, maintaining a high level of engagement, which means that the employees keep trust in our Group and have a willingness to voluntarily contribute to the realization of our vision.
Furthermore, this pursuit of the vision is nothing other than the embodiment of our Group Philosophy “To create a vibrant environment for all members of society” and the Taisei Spirit, the mindset that all executives and employees uphold in pursuing the Group Philosophy.
Based on this idea, after a series of discussions in the Management Committee and the Board, our Group defined its Medium- to Long-Term Vision as “The Ever-Evolving CDE3 (cubed) Company: A pioneering corporate group contributing to the development of a resilient society where people can live affluent and cultural lives.”
“CDE3” refers to the business domains we are involved in. “C” stands for Construction, meaning our Group's core building construction and civil engineering businesses. We will continue to explore these businesses even further. “D” and “E” stand for Development and Engineering, respectively, and they will be growth engines for our Group going forward. The above “CDE” and added “Energy” and “Environment,” both of which form the foundation constitute “CDE3 (cubed).”
In TAISEI VISION 2030, I give utmost importance to the “development of a resilient society.” This is a mission assigned to us in the construction industry, and I would like to tackle it ahead of others.

Medium-Term Business Plan (2021–2023)

In order to achieve TAISEI VISION 2030, our Group has identified the key issues to be focused on over the next three years, while considering the current business environment, in the Medium-Term Business Plan (2021–2023).
We classified and organized the key issues to be focused on over the next three years into business issues and sustainability issues, not by projecting the future as a linear extension of the present and the past, but by backcasting based on what we should be like in 10 years' time. Going forward, we will develop the foundation of sustainability management before working on various businesses.

Regarding business issues, we established strategies for the key issues by Group segment.
First, in the Group Domestic Building Construction Business, we will aim to secure superiority in an increasingly competitive customer order environment, and work mainly on expanding the sector specialized in building renovation and enhancing productivity.
In the Group Domestic Civil Engineering Business, we will enhance teams to win bids in early contractor involvement (ECI) projects where we can utilize our strengths as a group, and in sectors such as wind power generation facilities and expressway renewal where growth is expected.
As for the Group Overseas Construction Business, we will build the systems to ensure our profits by promoting both localization and operations at overseas offices, and collaborating with alliance partners.
In the Group Real Estate Development Business, we will strive to maximize Group synergies by optimizing our portfolio and establishing a stable income foundation.
In the Group Engineering Business, where our Group has a competitive strength, we will further enhance the pharmaceuticals and other sectors in which we have an advantage, while expanding to new sectors such as the fine chemicals sector for semiconductors and electronic devices, and developing new sales channels in the business of transporting and delivering pharmaceuticals.
Regarding sustainability issues, in the Energy and Environment area, we will accelerate our initiatives toward carbon neutrality, aiming to acquire front-runner status in the environmental sector.
Following the carbon neutrality declaration of the Japanese government, our Group revised its Environmental Targets, and set the target of “virtually zero” CO2 emissions from business activities by 2050. This falls in Scope 1 and 2 emissions of supply chain emissions. To achieve this target, we will aim to own 100 MW of renewable energy sources by fiscal 2030 to cover our Group's electricity consumption.
As for Scope 3 emissions, we will promote green procurement in the upper stream areas, such as the development and use of carbon-recycle concrete. Also in the lower stream, we will reduce CO2 emissions from usage of buildings after delivery through such measures as developing and commercializing next-generation, high-performance zero-energy buildings (ZEBs).
In the safety area, our key issue is “to achieve zero fatal accidents and zero serious accidents,” and in addition to the measures implemented so far, we will promote the utilization of digital technologies in this area too.
In the technical development area, our Group will use its technological capability to contribute to the industrial fields specified in the Green Growth Strategy of the Japanese government that are expected to grow through a virtuous cycle of the economy and the environment.
In the DX area, we will build an integrated platform to collect and visualize internal data by fiscal 2023, and develop a foundation to establish a highly efficient production process utilizing data.
In the workstyle reform area, we will promote further diversity and inclusion and establish a comfortable working environment to enable employees to leverage their diverse range of skills to the maximum possible extent. At the same time, in the governance area, we will work to maximize Group synergies by enhancing effectiveness of the Group governance systems.
In addition, the Taisei Group revised its materialities (important tasks that must be addressed) in reference to international codes of conduct and standards such as the United Nations Global Compact and ISO 26000.
We have clarified the whole picture of our Group's sustainability management: we identify key measures and other specific measures of the Medium-Term Business Plan based on these materialities, and they lead to the realization of the SDGs and our Group's environmental targets, Taisei Green Target 2050.

In starting the Medium-Term Business Plan, I think it is crucial that all officers and employees of our Group understand the details of TAISEI VISION 2030 and the Medium-Term Business Plan (2021–2023), share a high motivation and sense of mission for achievement, and exert their ability to the fullest. As President, I myself exercise leadership to resolve the issues and achieve the targets of the Medium-Term Business Plan (2021–2023) in the next three years, and beyond that, strive to realize TAISEI VISION 2030.

Numerical management targets in the last fiscal year (FY2023) of the Medium-Term
Business Plan (2021–2023) (Consolidated)

(Billions of Yen) (a) FY2020 results (b) Numerical management targets in
the last fiscal year (FY2023) of
the Medium-Term Business Plan
Difference
(b)-(a)
FY2030 targets in TAISEI VISION 2030
(Reference)
Orders received 1,650.6 1,950.0 299.4
Net sales 1,480.1 2,000.0 519.9 2,500.0
Operating income 130.5 140.0 95
Net income attributable
to owners of parent
92.6 100.0 74 150.0
ROE 11.6% About 10% About 10%
Dividend payout ratio 29.4% About 25%
Net interest-bearing debt Substantive debt-free
(275.3)
Maintaining state of substantive
debt-free management

Toward a New Era

In my view, the aim of the Company is to contribute to society by continuously providing customers with abundant value, satisfaction and excitement, and by enhancing the happiness of stakeholders. Sincerely accepting the wishes of all our stakeholders including customers, shareholders/investors, suppliers, employees, and local communities, and responding to them with better-than-expected results—I think this will not only enhance our competitive advantage, but also contribute to the realization of a sustainable, resilient society. To make it happen, I think it is essential to promote invigoration and diversity of employees while carefully nurturing our “Active and Transparent Culture,” persistently advance “Evolution of Tradition” by integrating traditional technology(maintenance) and future technology (innovation), and contribute to society with unique “Value Creation”for our customers. In short, it is essential for all of our employees to share the Taisei Spirit of “Active and Transparent Culture,” “Evolution of Tradition” and “Value Creation,” and our reason of existence is to put them into practice in daily business operations.
Uncertainty over the future domestic construction market, shortage of human resources, and sustainability issues including climate change—various issues and risks are ahead of us, and as they pile up, the roles and responsibilities that companies are expected to assume are changing.
Kihachiro Okura, the founder of Taisei Corporation, squarely faced many challenges in turbulent days, and continued tackling uncharted fields. Inheriting his pioneering spirit, we at the Taisei Group will continue our process to independently transform existing business models along with the times, solidify the foundation for sustainable growth, come up with innovations leading to the resolution of social issues, and create new value.
Through this process of new value creation, we will keep working for the new era.

We would appreciate our stakeholders' high expectation towards further growth of our Group as well as your continuous and invaluable cooperation and support.

President and Chief Executive Officer,
Representative Director

Yoshiro AikawaYoshiro Aikawa

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