Engineering for the Quality of Human Life

Transcription

1 JGC CORPORATION Engineering for the Quality of Human Life Hideo Masuda Vice Chairman and CFO January 2007 Contents 1. Settlement of Accounts 2. New Contracts by Business Field 3. Major Orders in First Half-Year 4. JGC s Trends in Orders Received 5. Outstanding Contracts 6. Outstanding Contracts by Business Fields 7. Our Clients Market Situation Current Environment for Contractors 10. JGC Countermeasures 11. JGC Action Plan1-5

2 1. Settlement of Accounts (Billions of yen) March 31, 2004 (%) March 31, 2005 (%) March 31, 2006 (%) March 31, 2007 (exp.) (%) Net sales Gross profit (7.4) (6.5) (6.6) (7.8) Operating income (3.7) (3.0) (3.7) (4.7) Net income (2.5) (2.7) (2.7) (3.0) New contracts Business Fields -New Contracts by Business Field Fiscal Year Oil & Gas Development Petroleum Refining LNG Chemical Power Generation, Nuclear Power, New Energy Living and General Production Environmental Protection, Social Development and IT Others Forecast 0 100, , , , , ,000 Millions of Yen

3 3. Major Orders in First Half-Year Japan Pharmaceuticals Chemicals Asia Chemicals Africa Gas Processing (FEED) <Total in first half-year> <Goal for full fiscal year> 133 billion yen 440 billion yen 4. JGC s Trends in Orders Received Steady Increase in Two-year Average Avg. 620 billion yen Avg. 480 billion yen Avg. 350 billion yen FY FY FY

4 5. Outstanding Contracts Hits All-time Record High 550 billion yen 1 trillion yen FY2002 FY2005 Doubles in Five Years 6. Outstanding Contracts -by Business Field 2.1% 1.4% 0.06% Oil & Gas Development 4.9% 20.6% Petroleum Refining LNG 28.3% 18.2% 24.3% Total 1,009billion as of end of March 2006 Chemical Power Generation, Nuclear Power, New Energy Living and General Production Environmental Protection, Social Development and IT Others

5 7. Our Clients Market Situation (1) Over seas Accelerated development of new oil & gas fields generates large increases in downstream projects. Numerous refineries, gas processing and Petrochemical projects are planned in MENA region. Downstream projects revitalized in Southeast Asia. 8. Our Clients Market Situation (2) Japan Increased investment in refinery modernization, heavy crude oil processing and integrated facilities for refining and petrochemicals World forecast for 2007: US$50 billion to be spent on oil, gas, and petrochemical facilities, representing a 20% year-on-year increase Source: Hydrocarbon Processing Market DATA 2007 In the MENA region, more than US$200 billion to be invested in oil and gas downstream facilities from 2007 thru 2011 Source: Middle East Economic Survey - APICORP Research

6 9. Current Environment for Contractors Number of projects by Clients Capacities of contractors Capacities of vendors & subcontractors Supply capacity Manufacturers Skilled labor Construction equipment makers Rises in equipment/materials costs caused by increased demand Longer delivery periods and lower quality brought about by overburdened vendors Shortage of qualified workforce at subcontractors 10. JGC Countermeasures Minimize Risks in All Project Phases and Secure Profits

7 11. JGC Action Plan (1) For successful project execution Strengthen partnerships with clients Diversify contract types (Open book estimates, Lump-sum conversion, Reimbursable, etc. ) Contract Engineering Procurement Construction 12. JGC Action Plan (2) For successful project execution Continue expansion of overseas engineering centers Increase use of outside resources Contract Engineering Procurement Construction

8 13. JGC Action Plan (3) For successful project execution Engage in continuous gathering/ analysis of cost and delivery information for equipment & materials Strengthen schedule control and QC staff (monitoring and support for vendors) Secure close relationship with key vendors from early stages Contract Engineering Procurement Construction 14. JGC Action Plan (4) For successful project execution Use proven resources from current projects for upcoming projects Utilize reliable foreign subcontractors In other countries Secure close relationship with key subcontractors from early stage Contract Engineering Procurement Construction

9 15. JGC Action Plan (5) For successful project execution Adopt thorough Risk Management Launch Project Advisory System giving to management direct involvement in major projects Effort at all stages Contract Engineering Procurement Construction

10 JGC CORPORATION Engineering for the Quality of Human Life for Reference Hideo Masuda Vice Chairman and CFO January 2007 JGC Group Scenario 2010 : New Medium-Term Management Plan

11 1. Target Management Figures Net Sales Net Income Dividend Payout Ratio (non-consolidated) Annual Dividend Per Share (non-consolidated) ROE End of Fiscal billion yen 15 billion yen 25% 11 yen 9.3% End of Fiscal 2010 (Goal) 600 billion yen 30 billion yen 25% 23 yen 11.0% or more 2. Expected Growth of Net Sales Billion yen FY 2010

12 3. Expected Growth of Net Income Billion yen FY Non-E&C Business Strategy Enterprise Investment Water and power generation Resource development Gas emissions credits Production Catalysts Fine chemicals Services Operation & Maintenance (O&M) Consulting

13 5. Investment Planning On the Basis of a Secure Financial Foundation 1. Investing in Enterprises 40 billion yen Target IRR : 12% or more From 2010 onward, recovery of investment 2. E&C Business Focusing on M&A for expansion of core business 6. Effect on Profit of Exchange Rate Fluctuation Total Cost : billion yen Overseas Job Cost : billion yen (462.8 billion x 80%) Cost Breakdown (as shown below) ( ): Overseas procurement Equipment and Materials : 37% (78%) *Payments to Japanese Vendors in Foreign Currency : 30% Other Expenses : 10% (80%) Subcontracted Work: 46% (100%) Personnel Expenses: 7% (20%) Overseas Domestic 75% 25% Overseas 100% Overseas 20% Domestic 80% Overseas 80% Domestic 20%

14 7. Effect on Profit of Exchange Rate Fluctuation Amounts to be paid in billions of yen: Equipment and Materials (370.2 x 0.37 x 0.22 x 0.7) Subcontracted Work 0.00 Personnel-related (370.2 x 0.07 x 0.8) Other 7.40 (370.2 x 0.1 x 0.2) Total Approximately 60% to be hedged by exchange contract Exposure : billion yen (US$ million at Yen = US$1) 8. LNG Plant Construction Projects Trains : 31 (31.6% of world total) Production : 90 million tons (35.9% of world total) Egypt 5,000,000 T/Y, 1 train Nigeria 2,950,000 T/Y, 3 trains 4,000,000 T/Y, 3 trains Qatar 3,300,000 T/Y, 2 trains Brunei 1,440,000 T/Y, 5 trains Yemen Indonesia 1,500,000 T/Y, 1 train 3,350,000 T/Y, 2 trains 3,800,000 T/Y, 2 train Malaysia 2,530,000 T/Y, 3 trains 2,650,000 T/Y, 3 trains 3,870,000 T/Y, 2 trains Australia 2,430,000 T/Y, 3 trains 4,200,000 T/Y, 1 train

15 9. Outlook for World LNG Demand America Europe Asia Actual Forecast Actual Forecast Actual 155 (million tons/year) 2020 Forecast World LNG consumption in 2005: 139 million tons Estimated demand in 2020: 386 million tons Need to add facilities to meet needs for 10 million tons/year production increases annually over next 15 years Source: IEEJ Asia/world Energy Outlook Planned LNG Projects JGC has been involved in many of these projects Algeria -SkikdaLNG -Arzew LNG Russia - Schtokman LNG -Baltic LNG Egypt -SEGAS LNG T2 - Iduku LNG T3 Iran -Pars LNG - Persian LNG -NIOC LNG Trinidad & Tobago - Atlantic LNG T5 Venezuela - Deltana Caribe LNG Peru -Peru LNG Nigeria -OK LNG - Nigeria LNG 7 Plus - Brass LNG Equatorial Guinea -LNG T2 Angola - Angola LNG U.A.E.. - ADGAS LNG T4 & T5 Australia - Gorgon LNG - Sunrise LNG -Pluto LNG - Pilbara LNG -Browse LNG - Ichthys LNG Brunei - Brunei LNG T6 Malaysia - Malaysia LNG T9 Indonesia - Tangguh LNG T3 *Red indicates projects in which JGC provided FEED and/or EPC for existing facilities

16 11. Worldwide Workforce JGC DESCON Engineering (Pakistan) 300 JGC Philippines (Philippines) 900 Domestic Engineering Subsidiaries 1,800 Increasing domestic and overseas manpower resources by 20% or more to respond to higher sales Expected Manpower Resource Expansion PERTAFENIKKI Engineering (Indonesia) 300 Global Engineering Center FY 2005 JGC 1,900 Overseas subsidiaries including M.W. Kellogg 1,800 JGC DESCON Engineering (Pakistan) 500 JGC Philippines (Philippines) 1,000 PERTAFENIKKI Engineering (Indonesia) Overseas 500 subsidiaries including M.W. Kellogg 2,300 Global Engineering Center Domestic Engineering Subsidiaries 2,000 FY 2010 JGC 2,200 7,000 Employees 8,500 Employees 12. Outstanding Contracts as Percentage by Business Region 0.1% 0.1% 0.1% Japan 21.1% Africa 57.2% 16.9% 4.6% Asia Middle East Oceania North & South America Total 1,009 billion as of end of March 2006 Others

17 13. Progress Image 100% 100% Construction Progress 20% Progress 80% months Time Schedule 14. Top International Contractors in 2005 Contracting Revenue from project outside home country Over All RANK Industrial / Petroleum HOCHTIEF ( Germany ) SKANSKA ( Norway ) VINCI ( France ) STRABAG ( Austrian ) BOUYGUES ( France ) TECHNIP ( France ) FLUOR ( U.S.A. ) BECHTEL ( U.S.A. ) JGC SNAMPROGETTI ( Italy ) 15 JGC 18 CHIYODA 23 KAJIMA authority: ENR 21/28 Aug The Top International Contractors

18 15. Steel Cost Trend CS Hot-Rolled Plate Cost Index CS Structural Steel SS Hot-Rolled Plate (SS316) Feb-02 May-02 Aug-02 Nov-02 Feb-03 May-03 Aug-03 Nov-03 Feb-04 May-04 Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 Time CS Hot-Rolled Plate CS Structural Steel SS Hot-Rolled Plate (SS316) Source: MEPS (International) 16. Main Products Catalysts & Chemical Industries Co., Ltd. Alcohol Flocculant Heavy Oil Gasoline Precision Cast Binder Organic Solvent Sol Video Tape Filler UV Block/Soft Focus Materials Kerosene, Diesel Poly Vinyl Chloride ZSM-5 De-NOx Catalyst VCM Synthesizing Catalyst FCC Catalyst Zeolite Direct Desulfurization Catalyst Indirect Desulfurization Catalyst Oil Refining Catalyst Environmental Protection Business Fine Chemical PetrochemistryBusiness New Business Nanoparticle Alignment Technology Sol/gel Preparation Technology Silica/Alumina Sol Memory Materials Anti-bacterial Agent Thin-film Preparation Technology Cosmetic Materials Optical Materials Semiconductor Display Materials Conductive Materials LCD-related Materials Ultra-Fine Silica related Titania Sol Conductive Coat Liquid materials Colloidal Anti- Bacterial Agent Hard Coat for Plastic Lenses CRT Surface Coat Material Insulating Planarization Material for Semiconductors Insulating Coat Liquid Carrier Tape Ultra-precise Silica Particles