Our Perception of the Business Environment
The international market was greatly impacted by the outbreak of the pandemic, and the economy unavoidably stagnated. Although COVID-19 is still very much relevant, the global economy has learned to exist alongside it and is advancing towards the next stage to move forward. On the other hand, political instability due to geopolitical factors is attracting unprecedented level of attention. Uncertainty risks such as sharp price increases and exchange rate fluctuations caused by the pandemic and political instability have been increasing, and the global economy remains unpredictable.
We expect market recovery in the Philippines, India, Bangladesh, and other countries in Asia where the Company's business is focused and there is healthy demand for infrastructure and construction investment as well as in Guam where the major industry is tourism.
Business Characteristics and Strengths
We have an extensive proven track record of construction project execution in Asia, where we are able to take advantage of networks we have built since our entry into the Thailand market in 1971. Moreover, we have built relationships of trust with our local partners and, in addition to participating in ODA projects centered on bridge construction and supporting the overseas expansion of Japanese companies, we are putting more effort into our marketing to leading foreign companies. We offer proposals that best fit the local environment based on cutting-edge technologies and optimum process management developed in Japan, establish the spirit of monozukuri, which is our spirit of valuing the process of construction and fabrication just as we are doing in Japan, and operate a construction business that is based on outstanding safety management and quality control systems.
Fiscal 2021 Business Results and Major Initiatives
We faced fiscal 2021 with strong determination and set our target for orders at 84.0 billion yen with an eye to securing a solid recovery in the wake of the COVID-19 pandemic, but due to the sluggishness of the order environment, actual orders amounted to a little over 55.0 billion yen. However, as a result of measures we took in 2021, we expect orders in fiscal 2022 to be much higher.
In fiscal 2021, the Company realized its first cross-border M&A. Antara Koh, an offshore civil engineering company based in Singapore, was made into a subsidiary. This M&A will allow us to take advantage of new opportunities to create and realize synergies by entering the offshore civil engineering business and enhancing deep foundation technology.
Future Policies
The SMCC Group strongly believes that the overseas business is its growth engine and will continue striving for its expansion. The Company will aggressively pursue growth in overseas construction markets with technology as the base, specifically the overseas deployment of domestically developed technology centered on PCa; develop human resource strategies to strengthen the growth foundation; and actively implement SX and DX in response to environmental changes and develop SX-related businesses, including those related to decarbonization, as set forth in the Mid-term Management Plan 2022-2024.
By steadily advancing these measures, we will cultivate our overseas construction business, expand business domains in line with social changes, and contribute to building bases that support the development of international society.
Opportunities and Risks as well as Basic Policies of the Mid-term Management Plan as Countermeasures
Risks
- Shortage of personnel required for overseas business
- Major fluctuations such as political and economic situations, exchange rates, and legal systems affecting entry into overseas markets
- Occurrence of terrorism, coups, natural disasters, and infectious diseases affecting entry into overseas markets
Opportunities
- Foundation based on long history of international business in overseas countries (results, experience, collaboration with local companies)
- Changes in the ODA market in terms of eligible countries and types of work
- Cultivation of local core employees in the four-location system (Japan, Philippines, India, Thailand)
Related Mid-term Management Plan Initiatives
In the Overseas Business, we are working to (1) grow the overseas construction business, (2) strengthen the business base to support such growth, and (3) actively implement SX and DX initiatives. We will expand the scale of orders as the Company's growth driver through the proactive overseas deployment of our domestically crafted superior technologies.
During the period of the Mid-term Management Plan 2022-2024, we will continue to strengthen our business systems in promising markets in ASEAN countries and South Asia. PCa technology is one of the Company's strengths in the civil engineering and building construction fields, and we will continue to expand its applications collaboratively across the entire Company. We will achieve increased productivity with the acceleration of DX and digitalization, which will help us overcome geographical limitations, cultural differences, and other aspects of international construction.
In addition, to create a strong and sustainable business system, we will set localization as the vertical axis to promote independence and strengthen the business foundation of every overseas base, and set global identity as the horizontal axis to connect each overseas base through our global human resources strategy. Moreover, we are building workstyles that ensure the safety, security, and well-being of our employees working in all overseas locations.
Key Projects Completed in Fiscal 2021
| Project name | New Bridge Construction Project over the Kelani River Package-2 |
|---|---|
| Project area | Sri Lanka |
| Clientc | Road Development Authority (RDA), Ministry of Transportation and Highways of Sri Lanka |
| Completion | November 2021 |
| Overview |
Main bridge (Sri Lanka's first extradosed bridge) length of 380 m, 6 lanes |
| Project name | RSI Hung Yen New Factory project |
|---|---|
| Project area | Vietnam |
| Clientc | VIET HAO HIGH QUALITY GARMENT CO., LTD |
| Completion | September 2021 |
| Overview | Overview Steel-framed structure, 1 story Site area: 76,510 m² Total floor area: 53,542 m² |