To Our Shareholders and Investors,

 

I have been appointed as President and CEO of Obayashi Corporation in April 2025. I would first like to express my sincere gratitude for your unfailing support.

 

Since its foundation in 1982, the Obayashi Group has worked hard to create new value in every space through the exercise of honest craftsmanship supported by superior technologies and the underlying spirit embodied in the Obayashi Three Pledges to quality, value, and efficiency. The Group has also sought to contribute to the realization of a sustainable society by devising creative solutions to various social challenges. As President and CEO, I will do my utmost to improve corporate value and ensure the Obayashi Group continues to operate as a company that is trusted by its shareholders, investors, and other stakeholders.

 

The Obayashi Group is currently focusing on strengthening its business foundation and accelerating company-wide transformation. As a direction of sustainable growth set in the Addendum to Obayashi Group Medium-Term Business Plan 2022, we aim to be a group centered on domestic construction business and other businesses generating performance equal to or greater than that of the domestic construction business. We will continue to strengthen the foundation of our construction business, primarily through improvements to productivity, and work steadily to implement growth strategies across our entire business portfolio. At the same time, we will establish a structure that will allow the Obayashi Group to respond appropriately to whatever changes may take place in the business environment.

 

In terms of performance indicators, we have set a target to achieve return on equity (ROE) of 10% or more by the fiscal year ending March 31, 2027, which is the final year of the current medium-term business plan. We intend to achieve this by pursuing management strategies that focus more strongly on capital efficiency and by promoting sustainable profit growth through proactive growth strategies, while also setting the level of necessary equity at around one trillion yen and implementing strategic capital policies.

 

Obayashi Group business performance has held firm thanks to resilient demand from the Japanese construction market. Going forward, we intend to further boost earnings growth by determinedly pursuing profitable orders and improving productivity in the construction business. We will also continue to invest in strengthening our management base as well as the foundations of our construction business and to make growth investment aimed at enhancing our business portfolio, while steadily moving forward with developing the organizational and governance structures that will allow us to achieve sustainable growth. In these ways, we will execute additional measures for accelerating transformation.

 

With regard to shareholder returns, our primary policy is to maintain long-term stable dividends. In addition to providing annual dividends with a targeted dividend on equity ratio (DOE) of around 5%, we intend to provide additional shareholder returns by acquiring own shares on a scale of 100.0 billion yen by the end of fiscal year ending March 31, 2027, to help appropriately control equity capital.

 

The Obayashi Group remains committed to the promotion of fully transparent management and will strive to further strengthen the precious bonds of trust with all its stakeholders. We will disclose timely and appropriate information on all aspects of our business, including the progress and impact of initiatives designed to strengthen our business foundation and accelerate company-wide transformation, and will clearly explain the path we have established toward attaining sustainable growth and enhancing corporate value.

We appreciate the continuous support of our shareholders and investors.

 

April 2025