Representative Director
President and CEO

To Our Shareholders and Investors

 

Since its founding in 1892, the Obayashi Group has exercised honest craftmanship with superior technologies and created new value in every place based on the spirit of the Obayashi Three Pledges, to quality, value and efficiency.  At the same time, we have been contributing to the realization of a sustainable society by creating solutions to social challenges.

 

The three fundamental strategies of Obayashi Group Medium-Term Business Plan 2022 "Strengthening the Business Foundation and Accelerating Company-wide Transformation," are "strengthen and expand the foundation of the construction business," "innovate technologies and businesses," and "expand business portfolio for sustainable growth," and through these strategies, we are working to build a business foundation capable of generating stable profits with a bottom line of 100.0 billion yen in consolidated operating income. Unfortunately, we failed to achieve our operating income targets for both FY2022 and FY2023 due to unexpected changes in the business environment, including a sharp rise in construction material prices. However, domestic construction demand is holding steady and our business performance is in recovery phase, so we believe that the operating income has bottomed out in FY2023.

 

The "Addendum to Obayashi Group Medium-Term Business Plan 2022 " is a partial revision of Obayashi Group Medium-Term Business Plan 2022 in order to realize sustainable growth by promoting management that emphasizes capital efficiency, based on the current status of the Group, including such performance outlook. We aim to achieve a return on invested capital (ROIC) of 5% or more in the medium term, and return on equity (ROE) of 10% by fiscal year ending March 31, 2027 (FY2026), the final year of the Obayashi Group Medium-Term Business Plan 2022 or more in the medium term by implementing strategic capital policies and setting the necessary equity l at around one trillion yen, while further improving profitability through order-receiving strategies emphasizing profitability and productivity improvement.
In addition, we will continue to invest in strengthening our management base and the foundations of our construction business, while also focusing on growth investments to expand business portfolio for sustainable growth, and steadily improve our organization and governance structure to carry out the measures for accelerating transformation.

 

With regard to shareholder returns, our policy is to maintain long-term stable dividends. Our target annual dividends was formerly set at dividend on equity ratio (DOE) of around 3%, but in accordance with the review of our capital policy, we raised this to  DOE of around 5%. Going forward, we will flexibly implement shareholder returns, including special dividends and acquisition of own shares,  according to the amount of necessary equity and profit.

The Obayashi Group will continue to ensure transparency in its management and strive to strengthen the relationship of trust with our shareholders and investors. With regard to the "strengthen the business foundation and accelerate Company-wide transformation", we will provide information on its progress and results in a timely and appropriate manner, and will show the path for sustainable growth and increased corporate value.

 

We appreciate the continuous support of our shareholders and investors.

 

August 2024