Dear Shareholders and Investors
Reliability No. 1: Your Partner for Success Aiming for Growth in Corporate Earnings
(July 1, 2008)
May this announcement find all of our shareholders in health and prosperity.
I would like to express my sincere gratitude for your exceptional support.
Chiyoda Corporation celebrated the 60th anniversary since its establishment as a corporation on January 17, 2008. Looking back over our history since being founded, I truly feel that we have carried the torch of the ideals of "Human Resources," "Technology and Reliability," and "Contributing to International Society" that were adopted at the time of our inception. At this time, I would like to report on our corporate status for fiscal year 2007 (ended March 31, 2008) and our management policy for fiscal year 2008 (ending March 31, 2009).
Fiscal Year 2007 Performance: Increased Revenue and Decreased Earnings
Demand for capital investments both domestic and overseas is as active as ever due to the increase in demand for energy at a global level. Although we have carried out thorough risk management and put all our energy into conclusively following through with existing orders, construction costs have increased due to special circumstances, including a shortage of skilled construction workers caused by an unparalleled construction boom in Qatar. Regretfully, as a result, earnings have declined due to an unavoidable decrease in operating income. Train 4 of the Qatargas liquefied natural gas (LNG) plant, which is claimed to be one of the biggest LNG trains in the world, will soon be completed as the first among the 6 trains under construction.
Our Slogan for Fiscal Year 2008: "New Horizons, Infinite Experience"
Inheriting the Accomplishments of Our Forefathers Clears Our Path to the Future
In fiscal year 2008, we will adopt even more comprehensive measures in consideration of cost management and safety, while continuing to work hard at restoring earnings by effectively following through with existing orders both domestic and overseas. As we plan on passing our legacy on to the next generation by strengthening the foundation of our engineering business, we will continue with three important goals implemented as of fiscal year 2007: 1) Proof of Reliability No.1 through effective follow through, 2) Establishment of safety oriented operation as a part of corporate culture, and 3) Execution of business strategies for the next term.
Capital/Business Alliance with Mitsubishi Corporation
On March 31, 2008, we concluded capital contribution and business alliance agreements with Mitsubishi Corporation. Through these agreements, we plan to achieve synergy with Mitsubishi Corporation, which shares our direction in terms of expansion of business in the field of plant engineering. Furthermore, in order to finance our goal of an increased business scale along with the increase in our business region, and to strengthen our relationship with Mitsubishi Corporation, we have issued stock through third-party allocation, with a payment of approximately \60.8 billion already completed.
New Medium-Term Management Vision
With the recent conclusion of our capital/business alliance with Mitsubishi Corporation, we expect to secure new earnings streams within five years in addition to LNG and gas processing plants, which represent our main earnings streams at present. Aiming at becoming a comprehensive engineering firm with diverse business content in various regions and business fields, we will draw up a new medium-term management plan to be implemented from fiscal year 2009 (ending March 31, 2010) after the current medium-term management plan, Double Step-Up Plan 2008 (DSP 2008), comes to an end on March 31, 2009.
Strengthening Integrated Group Operations
All employees in our group engage in business activities based on the Corporate Philosophy i.e. "Enhance our business and contribute to the development of a sustainable society as an integrated engineering company through the use of our collective wisdom and painstakingly developed technology." We have come up with a Chiyoda Group logo to celebrate our 60th anniversary, endeavoring to unite all group companies being trusted by all stakeholders, including shareholders, customers, business partners, employees, and regional companies. Having reconfirmed the corporate management principle as a group, we continue to promote integrated group operations.
To Our Shareholders
Although we have worked hard to strengthen our financial position by promoting the medium-term management plan, DSP 2008, settlements have fallen far below our plans at the start of fiscal year 2007, resulting in a distribution for this period of \10 per share. Aiming at a dividend payout of 30%, plans call for a distribution of \11 per share for fiscal year 2008. Since we are dedicated to working harder than ever to increase corporate value, I kindly ask our shareholders for their continued cooperation and support.
