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Securities code: 1414

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代表取締役社長 石原 一裕

To our shareholders

In the first quarter of the fiscal year ending on June 30, 2019, orders received were down 14.5% from one year earlier to ¥16,109 million. The main reason was the receipt of a large order of about ¥4,000 million from Metropolitan Expressway Company in the first quarter of the previous fiscal year. However, first quarter orders exceeded sales, so the order backlog increased ¥2,894 million (11.7%) to ¥43,439 million at the end of the quarter. Sales increased 7.3% to ¥13,215 million due to steady progress with work at the large volume of ongoing projects. Large orders received prior to this fiscal year are slowly beginning to contribute to earnings as we finish detailed designing work and preparations for construction. Due in part to these projects, gross profit increased 7.6% to ¥3,113 million, operating profit increased 5.2% to ¥2,202 million, ordinary profit increased 5.1% to ¥2,247 million and profit attributable to owners of parent increased 5.9% to ¥1,483 million. First quarter sales were 21.6% of the fiscal year plan and operating profit was 19.8% of this plan, both higher progress rates relative to the fiscal year plan than one year earlier. First quarter performance therefore gives us a strong start to accomplishing this plan.

The environment for receiving new orders remained favorable in the first quarter. We adopted an even more selective approach that emphasizes profitability for seeking orders from among the high number of prospective new projects. Due to this stance, we have received a large volume of orders for midsize and small national and local government projects for bridge repair and reinforcement work during the first quarter. This is a market sector where we have considerable expertise. There were very few new orders for large expressway company projects because most of the planned projects were still at point of official announcements and bid solicitations at the end of September. However, the volume of expressway company orders for additional work caused by design revisions increased. These orders received were about double the level of the first quarter of the previous fiscal year. This strong growth demonstrates our excellent reputation involving advanced technologies and new ideas for construction methods. We are dedicated to further enhancing our ability to create innovative proposals in order to meet customers’ demands for outstanding construction methods and quality. There was a large construction order in the first quarter for the seismic reinforcement of a factory. Demand is increasing consistently for seismic reinforcement work because of the large number of aging schools, factories and other buildings in Japan. This market category is ideally suited for the use of our technological expertise.

During the first quarter, we have gradually started initiatives concerning personnel system, corporate governance and other aspects of operations in order to build a stronger business foundation. This is the central goal of the Medium-term Business Plan that we announced in August. All group companies will continue to vigorously implement numerous measures in order to achieve more growth of our corporate value. We sincerely ask for your continued understanding and support as we take the actions needed to accomplish our goals.

November 2018
Tatsuya Kishimoto
President and Representative Director
SHO-BOND Holdings Co., Ltd.