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CEO Message

Yoshiharu Yoshikawa, President and Representative Director

I am pleased to express greetings to all of our shareholders, along with our appreciation for your continued loyal support.
Below, I would like to report on our operating highlights for the first half of the 114th term (period from April 1, 2017 to September 30, 2017).

During the first half under review, Japan’s economy saw a continued, steady recovery overall, driven by a improvement in consumer spending, capital expenditures, exports, production, corporate earnings and the employment situation.

As for the global economy, there was uncertainty about the future, given rising geopolitical risks, but the United States and European economies remain strong, while the recovery in China and Southeast Asia indicates the global economy as a whole is recovering steadily.

As for the general business climate, in Japan’s petroleum industry companies have pursued integration and reorganization, resulting in the formation of three major corporate groups.

Also, plans to suspend or decommission production facilities for petroleum products due to the rebuilding of production and supply systems associated with the effects of integration effects are being crystallized. Meanwhile, in Japan’s petrochemical industry, companies have maintained robust performance and ethylene plants continue operating at high utilization rates, driven by strong demand for petrochemical products.

The fiscal year under review (year ending March 31, 2018) corresponds to an off-peak season for turnaround maintenance, but during the first half the volume of this work actually exceeded our forecast.

In terms of profits, with a shortage of workers in the construction industry and pressure to increase wages causing an increase in cost price in outsourcing costs, the entire Group worked to secure profitability by reinforcing revenue management, increasing work efficiencies, continually reducing costs by reining in indirect costs.

As for the Group’s business performance during the first half, new contracts fell 6.7% year on year to 46,383 million yen. Works completed, which accounts for net sales, declined 3.1% year-on-year to 45,067 million yen. Operating income increased 0.2% year-on-year to 3,527 million yen, ordinary profit rose 9.7% year-on-year to 3,698 million yen, and net profit for the first half was up 15.2% year-on-year to 2,470 million yen.

On a non-consolidated basis, new contracts fell 8.5% year on year to 43,110 million yen. Works completed, which accounts for net sales, declined 4.9% year-on-year to 41,797 million yen. Operating income dropped 5.1% year-on-year to 3,071 million yen, ordinary profit declined 2.0% year-on-year to 3,171 million yen, and net profit for the first half was up 1.5% year-on-year to 2,216 million yen.

Although we will forgo our interim dividend, we plan to offer a year-end dividend of 30 yen per share.
In closing, I appreciate your continued support and understanding for our business.

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