Financial and Business Overview

Transcription

1 IR Roadshow Financial and Business Overview January 2013 Executive Vice President and Senior General Manager, Corporate Administrative & Financial Affairs Division and Chief Financial Officer JGC CORPORATION Masayuki Sato Contents 1 Settlement of Accounts 2 Balance Sheets 3 Order Received in the First Half 4 Business Fields -New Contracts by Business Field 5 Summary of Outstanding Contracts 6 Summary of Target Projects in the 2nd Half 7 Market Environment for FY Recent Market Environment Related Topics 9 Summary of Project Execution 10 Investment Business 2

2 1. Settlement of Accounts JPY base (Billions of JPY) March 31, 2010 March 31, 2011 March 31, 2012 March 31, 2013 (Forecast) Sep. 30, 2012 Net sales (Progress 48%) Gross profit (14.6%) (18.2%) (15.6%) (14.7%) (Progress 48%) Operating income (10.1%) (14.2%) (12.0%) (11.3%) (Progress 48%) Net income (6.5%) (5.7%) (7.0%) (7.3%) (Progress 52%) New contracts (Progress 22%) 3 1. Settlement of Accounts USD base (Millions of USD) March 31, 2010 March 31, 2011 March 31, 2012 March 31, 2013 (Forecast) Sep. 30, 2012 Net sales 4, , , , ,699.5 (Progress 48%) Gross profit (14.6%) (18.2%) 1,055.4 (15.6%) 1,128.2 (14.7%) (Progress 48%) Operating income (10.1%) (14.2%) (12.0%) (11.3%) (Progress 48%) Net income (6.5%) (5.7%) (7.0%) (7.3%) (Progress 52%) New contracts 7, , , , ,723.6 (Progress 22%) (USD 1= JPY 93.04) (USD 1= JPY 83.15) (USD 1= JPY 82.19) (USD 1= JPY 78.00) (USD 1= JPY 77.60) 4

3 2. Balance Sheets (Unit : Billions of Yen) FY2011 FY2012 2Q Difference Current assets Noncurrent assets Total assets *1 *1 Cash & equivalents Accounts receivable -9.1 Contract works in progress Current liabilities * *2 Advances received Noncurrent liabilities Total liabilities *3 Total net assets Total liabilities & net assets *3 Net income Dividends -9.7 Accumulated other comprehensive income Orders Received in the First Half Orders Received in First Half : Approx. 134 billion yen (Full year target: 600 billion yen) Major Contarcts Awarded Saudi Arabia Saudi Arabia Malaysia Japan Ethylene Facility Expansion project Aromatics Plant Project FEED contract t for Floating LNG project A Coal IGCC demonstration plant project, medical & power generation projects Received by JGC Gulf International 6

4 4. Business Fields -New Contracts by Business Field Fiscal year ,135 Oil & Gas development Petroleum refining LNG Chemical Power generation, nuclear power, new energy Living and general production Environmental protection, social development and IT Others , , , As of Sep. 30, 2012 : 133,750 Full Year Target: 600, , , , , , , , ,000 Millions of JPY 7 5. Summary of Outstanding Contracts FY2011 JPY 1,441.6 bn FY2012 2Q JPY 1,250.0 bn (USD bn ) (USD bn ) Others 88.8 (6.1%) Chemical 23.4 (1.6%) by Business sector Others 94.2 (7.5%) Chemical 46.1 (3.7%) Oceania (46.4%) (Unit : Billions of JPY) by Region LNG (56.3%) Oceania (47.8%) LNG (58.1%) Petroleum refining 84.3 (5.9%) Oil & gas development (30.1%) Petroleum refining 72.3 (5.8%) Oil & gas development (24.9%) Middle East (24.0%) Africa and Others (10.0%) Asia (11.7%) Japan (7.9%) Middle East (21.9%) Africa and Others (9.4%) Asia (10.7%) Japan (10.2%) Mar. 31, 2012 Sep. 30, 2012 Mar. 31, 2012 Sep. 30,

5 6. Summary of Target Projects in the 2nd Half Major Target Projects Southeast Asia Refinery and LNG Projects North Africa Gas Processing Projects Middle East Refinery Projects, Crude Oil Processing Projects 9 7. Market Environment for FY2013 Continuation of highly proactive capital investment in oil and natural gas projects Middle East Many large projects across the Gulf states (Crude oil processing, refinery and petrochemical projects) Asia/Oceana LNG projects in Southeast Asia and Australia Africa Gas development projects in Algeria LNG project in East Africa North America LNG, gas chemical and GTL projects 10

6 8. Recent Market-Environment-Related Topics (1) Change in North America Market with Shale Gas Development Shale resources development an important upstream business for IOC A large number of downstream investment projects using shale gas are planned for North America (17 LNG projects, 20 gas chemical projects, 2 GTL projects) (Source: JGC) The USA is expected to export approx. 14 million tons of LNG by 2020 (Source: EIA) Due to energy security and environmental concerns, whether or not projects will proceed smoothly is unclear (projects with the necessary environmental and export permits are proceeding) Recent Market-Environment-Related Topics (2) Diversified LNG plant market Expanding global LNG demand From approx. 220 million tons annually y( (in 2010) to approx. 450 million tons annually in 2035 Demand increase, mainly in Asia (Source: Institute of Energy Economics, Japan) Diversified plant construction areas In addition to Southeast Asia, the Middle East/North Africa, and Australia, expanding into Sub-Saharan Africa, the Americas, and Russia Diversification of natural gas feedstock Development of small and midsize offshore gas fields, unconventional gas such as coal-bed methane and shale gas, as well as large conventional gas fields 12

7 Global LNG Project Plans and JGC Projects Underway Approx. 40 Existing LNG Project Plans Globally JGC s four EPC projects and three FEED contracts underway Russia ~5 planned projects North/South America ~20 planned projects Middle East/Africa ~10 planned projects Mozambique - Mozambique LNG FEED Malaysia - Bintulu LNG T9 FEED - FLNG2 FEED Southeast Asia/Oceania ~10 planned projects Indonesia - Donggi-Senoro LNG Papua New Guinea - PNG LNG Australia - Gorgon LNG -Ichthys LNG Recent Market-Environment-Related Topics (3) JGC s Response and Policies Challenge in North America EPC market Strategic response, including collaboration with U.S. contractors Prompt response to expanding LNG market Participation in plan from the initial stage, execution of FEED, and EPC orders Ensuring dominance in Floating LNG projects Meeting requirements for the advanced health & safety environments (HSE) policies of clients Boost project compatibility with modular construction methods 14

8 9. Summary of Project Execution Project Execution Status Management of large scale projects continues to be satisfactory. Prices of equipment and materials remain high but stable. The labor market is stable, except in Australia. Steady project execution to meet target gross margin Achieving realistic estimates to ensure cost cutting is executed. Improving operational efficiency for each engineer and multi-skill development Acting swiftly and proactively on changes in markets for materials, equipment, machinery, and labor Continuing the development and use of new vendors and subcontractors Investment Business (1) Investment in First Half: Approx. 15 billion yen Investments in First Half Photovoltaic Power Generation Project (Oita, Japan) Acquisition of Shale Gas Project Interest (Canada) Investment Policies from the Second Half of Fiscal 2012 Developing proposals in infrastructure, such as desalination, power generation and urban development, and in renewable energy 16

9 10. Investment Business (2) More than a dozen projects are being developed and operated. UAE: Taweelah B&A2 IWPP China 3 Juhua HFC23 recovery and decomposition CDM 4 Alternative cement raw material CDM (Inner Mongolia) 5 Cement plant residual heat recovery and generation CDM 6 Coal mine methane power generation CDM Saudi Arabia: Rabigh IWSPP Canada: Shale gas development business 20 Spain: Solar thermal generation business U.S. 8 Oil and gas field production and sales business 18 Shale oil development business 19 Gas field development business Algeria: Power plant O&M business Power and desalination Water China: Seawater desalination business Japan India: Integrated township Project 9 DME promotion business 10 Matsuzawa hospital PFI business 11 Investment in Ebara Engineering Services 12 Pharma services business 21 Photovoltaic power generation project Philippines: Bioethanol production and power supply operations Indonesia: JCF business 15 Australia: Water and sewage business Emission trading (CDM) New energy Other businesses Resource development Power plant O&M 17 Note on Future Outlook This presentation may contain forward-looking statements about the JGC Corporation. You can identify these statements by the fact that they do not relate strictly to historic or current facts. These statements discuss future expectations, identify strategies, contain projections of results of operations or of financial condition or state other forward-looking information. These statements are based on currently available information and represent the beliefs of the management of the JGC Corporation. These statements are subject to numerous risks and uncertainties that could cause the JGC Corporation s actual results, performance, achievements or financial condition to differ materially from those described or implied in the forward-looking statements. The JGC Corporation undertakes no obligation to publicly update any forward-looking statements after the date of this presentation. These potential risks and uncertainties include, but are not limited to: competition within the financial services industries in Japan and overseas, our ability to adjust our business focus and to maintain profitable strategic alliances, volatile and sudden movements in the international securities markets, foreign exchange and global economic situations affecting the JGC Corporation. For questions concerning this material, please contact: JGC Corporation PR and IR Department Tel: Fax: ir@jgc.co.jp 18

10 Annex JGC s Strengths (1) Superior Engineering Capability Proven performance in the area of advanced technologies including LNG and GTL projects Outstanding Project Management Ability Excellent performance on Lump-sum projects. Also able to effectively handle Cost-reimbursable projects Wide Project Experience in Many Countries and Regions Markets are not restricted to particular regions or fields A flexible organization with a balanced project portfolio 20

11 JGC s Strengths (2) Extensive Experience In Markets with High Growth Potential LNG plant market share is Approx. 30%; Especially strong in the area of fgas processing plants and dgas chemical plants Sound Financial Structure Low Debt Equity Ratio ( 0.03, as of FY2012) 21 New Mid-term Management Plan Medium-Term Management Plan 22

12 Targets Fiscal 2015 (Targets) Net Profit 50 billion ROE At least 10% 23 Positioning 5-year plan focused on 10 years in the future Transition to new corporate vision = Program Management Contractor & Investment Partner 2010 New Horizon Next Medium-Term Management Plan

13 What is Program Management? Program Management involves effectively planning and implementing business strategies and providing services in all areas, from EPC and investment through to operation services and manufacturing. Program Management FEED EPC O&M Business planning and implementation Planning and management services PMC Business investment and operation Manufacturing, IT services, etc. EPC: Engineering, Procurement and Construction FEED: Front-End Engineering and Design O&M: Operation and Maintenance PMC: Project Management Consulting 25 Market Environment Market environment in the overseas hydrocarbon EPC sector is likely to remain positive in the future, amidst increasingly fierce competition Sectors Regions Markets are expanding steadily in non-hydrocarbon sectors (non-ferrous metals, pharmaceuticals, medical) Social infrastructure investment (water, power, rail, etc.) is growing into a massive market Promising developments in the overseas hydrocarbon EPC sector in South America, Russia, and Central Asia, as well as the Middle East, North Africa, Southeast Asia and Oceania Social infrastructure development concentrated in emerging countries Focus of capital investment by our domestic customers shifting overseas 26

14 Business Model EPC business: Investment and Service: EPC business Existing sectors Developing business in new sectors as well as existing sectors Increasing business investment and businesses developing planning and management services Investment/Service businesses Business investment and operation Planning and management services New sectors Manufacturing, IT services, etc. 27 Manpower Resource Projections Increasing employees at overseas EPC subsidiaries to take groupwide manpower to approximately 13,000 Manufacturing, etc. 2,000 Overseas EPC 4,200 Manufacturing, etc. 2,200 Overseas EPC 6,000 Domestic EPC Domestic EPC 2,700 2,700 JGC Main Office 2,100 Total: 11,000 employees Fiscal 2009 (actual) JGC Main Office 2,100 Total: 13,000 employees Fiscal 2015 (projected) 28

15 Organizational Strategy: Becoming a Genuinely Global Group Continuing to reinforce and expand overseas EPC subsidiaries, in the interests of the expansion and growth of JGC Group as a whole. Option of establishing new overseas EPC subsidiaries. Becoming a genuinely global group, consisting of a widespread network of EPC subsidiaries in a number of countries and regions Filling managerial positions with local personnel and actively recruiting local talent JGC Gulf (Saudi Arabia) JGC JGC Main Office Vietnam JGC Algeria JGC Philippines JGC Singapore JGC Indonesia 29 Technology Development Strategy New Technology for New Business Priority Strategy Accelerate commercialization of development technology and become more active in the licensing business Create and promote new businesses in growth sectors Promote external partnerships through open innovation Core Sectors Demonstration facilities for propylene manufacturing technology Resources Manufacturing Social infrastructure and life sciences Environment and new energy JGC Coal Fuel (JCF) Testing new CO 2 recovery technology (INPEX Koshijihara Plant) 30

16 EPC Business Reinforcement (1) 1. Increasing competitiveness in the hydrocarbon sector Drastically improve cost competitiveness Reinforce marketing capabilities and strengthen relationships with clients Market development (North Africa, Australia, South America, Russia, Central Asia, etc.) Further reinforce project execution capabilities 2. Expanding operations in non-hydrocarbon sectors Further expand operations in the non-ferrous metals sector Expand overseas operations in the pharmaceuticals and medical sectors 31 EPC Business Reinforcement (2) 3. Reinforcing overseas EPC subsidiaries Focus on localization in oil- and gas-producing countries Increase orders for small and medium scale projects Reinforce cooperation within the Group 4. Developing business in new EPC sectors Expand and reinforce operations in the F-LNG sector Break into the market for overseas nuclear power projects Look into infrastructure projects Incorporate modular construction* into project services *Modular construction: Method whereby plant facilities are manufactured on a small scale in separate locations and then assembled on site 32

17 Investment and Service Business Expansion (1) 1. Investment Backgrou und Environmental conservation Growth in emerging countries Shift towards renewable energy Growing need for energy and social infrastructure development Power and new energy sectors IPP & IWPP, solar energy, bioethanol, coal slurry (JCF TM ) Environment and water sectors Environmental conservation in China Stepping up construction, management and O&M in the overseas water and sewage sector Resource development sector Continuing oil and natural gas development Entering mineral resource business New sectors Urban infrastructure development (including airports) and new industrial development (pharmaceuticals, medical, housing, agriculture) 33 Investment and Service Business Expansion (2) 2. Planning and Management Services Expand planning and implementation ti management services in the resource development and social infrastructure development sectors, as an investor and owner. Business planning and implementation FEED (Front-End Engineering Design) PMC (Project Management Consulting), etc. 34

18 Investment and Service Business Expansion (3) 3. Manufacturing, etc. Catalyst and fine chemicals business Step up overseas expansion Expand exports of FCC catalysts Increase exports of environmental catalysts to Europe and the US, and expand feedstock sales via subsidiary in China Promote overseas production and sales of fine chemicals IT services, consulting business, etc. Continue with overseas expansion Promote groupwide cooperation in the social infrastructure development sector (ICT*, environmental consulting, etc.) Provide multifaceted services in cooperation with overseas EPC subsidiaries (*ICT: Information and Communications Technology) 35 World Energy Demand As an effect of population growth, non-oecd demand is rising Fossil fuels will continue to provide much of the world s energy Source : BP Statistical Review of World Energy

19 Natural Gas Production by Source in US TCF 30 Shale gas production is expected to undergo a large-scale increase over the long term % Shale gas 49% Alaska 2% 26% 28% 12% 9% Tight gas Lower 48 onshore conventional Lower 48 offshore Coalbed methane Alaska 1% Year 22% 12% 10% 6% Source : EIA Annual Energy Outlook Achievements in LNG Projects Trains : 39 (31.7% of world total) Production : million tons (32.7% of world total) Egypt 5,000,000 T/Y, 1 train Qatar Brunei Indonesia 3,300,000 T/Y, 2 trains 1,440,000 T/Y, 5 trains 1,500,000 T/Y, 1 train 3,800,000 T/Y, 2 trains 2,000,000 T/Y, 1 train Papua New Guinea 3,500,000 T/Y, 2 trains Nigeria Yemen Malaysia Australia 2,950,000 T/Y, 3 trains 4,100,000 T/Y, 3 trains 3,350,000 T/Y, 2 trains 2,530,000 T/Y, 3 trains 2,650,000 T/Y, 3 trains 3,870,000 T/Y, 2 trains 2,430,000 T/Y, 3 trains 4,200,000 T/Y, 1 train 5,000,000 T/Y, 3 trains 4,200,000 T/Y, 2 trains 38

20 Outlook for World LNG Demand Americas Europe Asia Actual Forecast Actual Forecast Actual (million tons/year) 2035 Forecast World LNG consumption in 2011: 244 million tons Estimated demand in 2035: 467 million tons Need to add facilities to meet needs for 9 million tons/year production increases annually over next 24 years Source: IEE Japan Asia/World Energy Outlook 2012 BP Statistical Review of World Energy Planned LNG Projects JGC has been involved in many of these projects Canada - Kitimat LNG -BC LNG - Shell LNG -Petronas LNG and other Russia -Stokman LNG -Pechora LNG - Yamal LNG -Vladivostok LNG - Sakhalin 3 LNG U.S. - Freeport LNG -Cameron LNG -Cove Point LNG - Golden Pass LNG and other Cameroon -Cameroon LNG Malaysia - Bintulu LNG T9 - FLNG 2 Tanzania - Tanzania LNG Indonesia - Tangguh LNG T3 - Abadi FLNG Venezuela - Deltana Caribe LNG Nigeria -OK LNG - Nigeria LNG 7 Plus - Brass LNG *Red indicates projects in which JGC provided FEED and/or EPC services for existing facilities Equatorial Guinea -LNG T2 Mozambique - Mozambique LNG Australia - Sunrise LNG -Browse LNG -Pluto 2 LNG - Scarborough LNG - Bonaparte LNG - Arrow Energy LNG (CBM) -Newcastle LNG (CBM) 40

21 Main Products -JGC Catalysts & Chemicals Ltd. Diesel Vehicles Muffler Catalyst Curtains Thermal Power Plants DPF for Diesel Vehicles Solar Cells Power Tools for Solar Cell Fuel Cells for Lithium Ion Batteries Air Cleaners for Fuel Cell Materials for New Energy Garbage Incinerators DeNOx Catalysts for Steel Plate for Diesel Emmision Treatment for Deodorant Control and Antibacterial Colloidal Materials for VOC treatment Materials for Environment Environment & New Energy Business Area Steel Plates for Vehicle Catalysts Cosmetic Raw Materials Foundation UV Protection Cream for Foundation for UV Protection for Make up Eye Shadow for Cream Kerosene Sulfur Free Diesel Gasoline Fuel Oil Hydroprocessing Catalysts Hydrotreating Hydrorefining Hydrocracking FCC Catalysts FCC Catalysts t CO Combustion Promoter Octane Boost Additive DeSOx Additive Propylene Max Additive Petroleum Refining Catalysts Catalysts Business Area Chemical Catalysts Fine Chemicals Business Area Optical Materials Information/Electrical Materials for LCD for Conductor for Memory Lipstick Optical Materials for FPD Plastic Lenses LCD TVs Personal Computers Polyvinyl Chloride Petrochemical Catalysts Hydrogenation Catalysts Zeolites Catalyst Carriers Syngas Catalysts Polishing Agents for Semiconductor Mobile Phones Hard Disk Drivers Detergents Chemical Fibers Machine Parts Semiconductors for Green Earth for Comfortable Lifestyle