gnavistart_XotNannRS
gnaviend_XotNannRS
  1. HOME
  2. About Chiyoda
  3. Brief History of CHIYODA Corporation

About Chiyoda

Brief History of CHIYODA Corporation

Established to become an advanced engineering company

CHIYODA Corporation was created by the enthusiasm of Mr. Akiyoshi Tamaki, who had been a manager of the construction division at Mitsubishi Oil Co., Ltd. (currently NIPPON OIL & Energy). Mr. Tamaki, in anticipation of the resumption of the petroleum refining business in postwar days, committed himself to the creation of an advanced engineering company specializing in industrial facilities, and retained some of the engineers in Mitsubishi Oil, which had been substantively liquidated just after World War II. With the support of the senior executives of Mitsubishi Oil, he established CHIYODA Corporation in January 1948, two years after the war, with 25 employees. Mr. Shigeo Okubo, who had been the president of Mitsubishi Oil at the end of the war, was eventually persuaded by Mr. Tamaki to become the first president of the new company.

Expansion with the development of the Japanese petroleum industry

CHIYODA grew with the development of the Japanese petroleum industry and went public in 1957. Orders received in 1960 exceeded 10 billion yen and the number of employees rose to 1,400. CHIYODA was listed on the first section of the Tokyo Stock Exchange in 1961.

Becoming global enterprise after the entry to Middle East Market

CHIYODA established its overseas sales division when OPEC was constituted in 1959. CHIYODA, along with Mitsubishi Corporation and several other Japanese companies, paid an official visit to Saudi Arabia in 1962, as a natural gas development and utilization survey team. In 1966, CHIYODA acquired the order for its first overseas turnkey construction project, the construction of Jeddah refinery (phase I) in Saudi Arabia. This pioneering project led to CHIYODA receiving further orders in Saudi Arabia, such as the construction of Jeddah refinery (phase II), construction of Riyadh refinery (phases I & II), and, in 1980, Yanbu refinery. The value of the orders received in 1970 exceeded 100 billion yen, and the number of employees reached 2,700. In 1980, upon the sudden outbreak of the Iran-Iraq War, crude oil prices skyrocketed to $30 to $40 a barrel. For three consecutive years from 1980, the value of received orders reached a level of 350 billion yen each year, and the number of employees reached 3,500.In 1983, CHIYODA achieved record high earnings before tax of over 50 billion yen.

Challenge for diversification

In 1984, the value of orders received declined sharply to about 150 billion yen due to shrinking e Middle East market. CHIYODA started looked to diversify its business interests in the domestic market, such as entering into non-hydrocarbon fields including general industrial facilities. CHIYODA subsidiaries and affiliates increased in numbers, up to 51 in 1999. During the 1990s, the Asian economy grew rapidly and the Southeast Asian market perked up. However, during that period, Korean companies, which had caught up technologically with Japanese companies in the refinery and general chemical plant field, entered the market. This provided tough competition to Japanese companies and, as a consequence, profitability deteriorated from each order received. Although CHIYODA’s entry into new business fields achieved some positive results, it could not dramatically change the overall performance of the company. CHIYODA posted an operating loss in 1996, and had to endure hard days until 2002.

Implementation of financial restructuring plan

Since 1998, CHIYODA began restructuring all aspects of its business, backed by the support of the managements of the Bank of Tokyo-Mitsubishi, Ltd. (later The Bank of Tokyo-Mitsubishi UFJ Ltd.), Mitsubishi Corporation and Kellogg Brown & Root (KBR), a major US engineering company with whom CHIYODA formed an alliance for the introduction of ethylene production technology. The restructuring activities included financial realignment, such as allocating new shares to third parties, reducing capital without compensation, debt relief and other measures, and the number of employees has been reduced to 1,100. Since 2001 Mr. Seki, President and CEO (56 years old at the time of promotion), led the new management team and implemented the restructuring plan with one of the aims being the elimination of accumulated losses by March 2006. The restructuring plan included (1) redefining the business domain, (2) maintaining appropriate staffing levels, (3) reducing fixed expense, (4) restructuring of group companies, (5) strengthening the marketing of the business, (6) improving the perceived and actual quality of the company through business alliances, (7) financial restructuring. CHIYODA posted an operating profit in 2003 and, as of the end of September 2004, eliminated the accumulated losses on non-consolidated basis which, at one time in 1998, had reached 100 billion yen. Therefore, the restructuring plan was accomplished one and a half years ahead of schedule.

Expansion of natural gas related market

In 2000, international oil majors that had experienced mergers and acquisition began major investment in the natural gas market as it was recognized as a clean energy source. The price of crude oil remained high and increasing concerns on environmental issues backed the movement to gas, which in turn led to the expansion of LNG plants and, more recently, a much broader gas-value-chain market. CHIYODA, as the first Japanese company in the Middle East region, ventured into the LNG market, undertook construction of an LNG plant in the United Arab Emirates in1973 and, subsequently, constructed several other LNG projects. The swing to natural gas in 2000 enabled CHIYODA to take advantage of almost 20 years experience in this field to change the focus of its business. Since then CHIYODA has been involved in the development of grass roots projects in various countries including Qatar, Oman, Russia (Sakhalin) and Papua New Guinea, and is proud to have been given the opportunity to contribute to their economic development.

Step-up plan after financial restructuring

In 2005, CHIYODA initiated a medium-term management plan “Double Step-up Plan 2008” (“DSP2008”) to enhance corporate value as the growing “Reliability No.1 Project Company” through fiscal year ending March 31, 2009. This plan was to grow further as “Excellent Company” upon completion of financial restructuring.

In March 2008, CHIYODA entered into collaboration agreement with Mitsubishi Corporation and allocated them new shares in the following April. This allocation of shares was aimed to stabilize the financial and business base while allowing for sustainable growth and the expansion of its business activities.

Medium-term Management Plan “Engineering Excellence, Value Creation

Advancing the result of DSP 2008, CHIYODA initiated a medium-term management plan “Engineering Excellence, Value Creation” from fiscal year 2009 (ending March 31, 2010) to year 2012 (ending March 31, 2013). In the plan, CHIYODA is pursuing reinforcement of its core business, expansion into other business fields and enhancement of global operations.