Our building construction business creates well-rounded, safe living spaces tailored to the needs of customers in wide-ranging sectors, from collective housing as the core of our business to commercial facilities, distribution warehouses, offices and production facilities in various industries.
In the field of collective housing, we take pride in a high level of competitiveness and a wealth of track record in the construction of high-rise residential buildings, leveraging our proprietary SQRIM building frame method. We also provide facility maintenance and reconstruction that are indispensable to making facilities disaster-resistant or to customers’ business development at various types of business facilities, leveraging our high technological capability.

We find it difficult to predict the outlook for investments in the overall construction market for a number of reasons, such as the revisions to planned capital projects by manufacturers triggered by the COVID-19 outbreak, and changes in the business conditions for office buildings and commercial/accommodation facilities, in addition to the completion of facilities for the Tokyo Olympics and Paralympics and the curtailment of CAPEX by the private sector. In the meantime, demand is growing for distribution warehouses and data center facilities, as shopping on the internet has become more common given a new lifestyle or the new normal firmly in place, while rapid growth is expected for health and medicine related facilities amid the growing need to fight infectious diseases, and for facilities in the field of environment/energy including zero energy buildings and biomass power plants which are aimed at realizing carbon neutrality. In this business environment, we will continue to focus on these markets. We will also make proactive efforts to achieve SDGS and carbon neutrality through our business operations.

During fiscal 2020, the second year for our Medium-term Management Plan, extraordinary factors, such as the curtailment or delay in capital investment projects by the private sector amid the COVID-19 pandemic, affected the earnings projections for the overall construction industry. In fiscal 2020, the amount of orders received remained unchanged from the same period last year at 185.8 billion yen, with the amount of completed work at 193.9 billion yen (down 18.5% year-on-year) as many of the orders received were large-scale construction works that had just started. As a consequence of decreased completed work and deteriorated profitability in some construction works, gross profit of completed work declined to 13.3 billion yen (down 30.7% year-on-year).

Under these circumstances, we have successfully improved our competitive position and advantage in terms of construction technology in the large-size distribution warehouse segment, which we have positioned as a priority area and thus have focused on. The segment has now evolved into an area of our specialty, along with high-rise collective housing. As a result, orders received increased significantly in the segment. We will continue to sharpen our competitiveness as the logistics facilities development market will likely continue to grow in the future.

The basic policy of the Building Construction business for fiscal 2021 is to further promote a range of measures aimed at realizing our future vision for our production and operation processes, including digitalization, which we continued to work on until the previous fiscal year, and to demonstrate the effect of such measures in daily operations. Under the current business environment, while the outlook for future operating performance is uncertain given the influence of COVID-19, we will work on the following basic measures based on the belief that we can realize our future vision by continuing to make proactive efforts and yield positive results toward transformation: