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To all our shareholders

President & CEOTakashi Kusaka

Thank you very much for your continued support.

With the spread of the novel coronavirus infection, the situation regarding the domestic economy continued to be difficult in fiscal 2021, with the declaration of a state of emergency and the implementation of the semi-state of emergency Covid-19 measures and restrictions on economic and social activities. However, with the spread of vaccination against the novel coronavirus and the lifting of various restrictions, some signs of recovery were apparent. Overseas too, although demand is on the up, in the second half of the year heightened geopolitical risks spurred an upward trend in the cost of raw materials and resources, and the outlook remained uncertain.

In the facilities engineering industry, amid the continuing rise in the cost of materials and equipment and the shortage of labor, investment in data centers, semiconductors, etc., remained strong. In contrast, in Southeast Asia where Fuji Furukawa Engineering & Construction is expanding its business, the situation continued to be severe as a result of the impact of restrictions on activities due to the spread of the novel coronavirus variant. Under these circumstances, the Fuji Furukawa E&C Group continued to work to enhance our competitiveness while taking a flexible approach to changes in the business environment.

The Group’s consolidated financial results for fiscal 2021 showed orders received to the amount of 86.8 billion yen (up 12.2% year-on-year) and sales of 82 billion yen (up 10.6% year-on-year). With respect to profit, due to the increase in sales, reduced prices and cost cutbacks, we set a new profit record; operating profit was 6.592 billion yen (up 10.2% year-on-year), ordinary profit was 6.76 billion yen (up 12.1% year-on-year), and current net profit attributable to parent company shareholders was 4.67 billion yen (up 16.8% year-on-year). Furthermore, we were ahead of schedule in achieving our goal of an operating profit of 6 billion yen and current net profit of 3.8 billion yen, which were our targets for fiscal 2023. In addition, due to the effect of the Accounting Standards for Revenue Recognition that will be applicable from the current fiscal year, sales are up 1.2 billion yen and operating profit is up 27 million yen.

As for the year-end dividend, as earnings in excess of the forecast at the beginning of the fiscal year were secured, we were able to pay a dividend of 130 yen per share, 30 yen more than our initial dividend forecast.

With respect to the outlook for fiscal 2022, it is expected that with the recovery of economic activity in the aftermath of the pandemic, investment in plant and equipment mainly in the private sector will move onto a firmer footing, but in the facilities engineering industry it is expected that the business environment will continue to be uncertain, with critical labor shortages and soaring procurement prices.

Under these circumstances, the Fuji Furukawa E&C Group will work to switch to ESG (Environmental, Social and Governance) management, and will make company-wide efforts to contribute to the resolution of social issues through our business activities. In fiscal 2021, in addition to the establishment of a structure to promote this switch and efforts to spread education on sustainability throughout the company, through discussions at workshops and other events, we identified the material issues. We also evaluated our impact on social issues abstracted in light of our business and established specific initiatives and key performance indicators aimed at achieving our material goals.

It is our intention, by resolving social issues through our business activities going forward, to contribute to the achievement of SDGs (Sustainable Development Goals). As for our material goals, these will be described in detail on the next page.

As for our business strategy, in addition to working to secure material resources through the incorporation of capital investment aimed at decarbonization and resource investment in our areas of strength, including data centers and semi-conductors, with a view to cost reduction we will steadily implement centralized purchasing and planned ordering. With regard to our overseas business activities in Southeast Asia, where conditions remained severe due to the Covid-19 pandemic, we will work to reform the business structure in accordance with the situation at each location.

Further, we will strive to enhance our competitiveness and ensure performance while promoting work style reform through exhaustive business improvement aimed at increased productivity, and through aggressive investment in IT-related fields and R&D.

On the basis of these initiatives, with respect to our forecast for consolidated financial results for the period to March 2023, we anticipate orders received of 90 billion yen (up 3.6% year-on-year); sales, 83 billion yen (up 1.2% year-on-year); operating profit, 6.65 billion yen (up 0.9% year-on-year); ordinary profit, 6.65 billion yen (down 0.8% year-on-year); and net profit attributable to parent company shareholders, 4.4 billion yen (down 4.5% year-on-year). As for next year’s dividend, we intend to make company-wide efforts to bring the dividend up to 150 yen, an increase of 20 yen per share.

I would like to ask all our shareholders for your continued understanding and support.

June 2022