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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

The current fiscal year, which ends in June 2018, started with an order backlog of ¥32,368 million, which was ¥7,286 million higher than at the start of the previous fiscal year. During the first half of the fiscal year (July 1 to December 31, 2017), orders received continued to climb, increasing ¥3,370 million from one year earlier to ¥35,715 million. As a result, the order backlog at the end of December was ¥40,233 million, ¥8,098 million more than one year earlier. As work progressed as planned on the order backlog, sales increased to ¥27,850 million, up 10.1% year on year. Operating profit was up 4.7% year on year to ¥5,263 million, ordinary profit increased 4.8% year on year to ¥5,397 million and profit attributable to owners of parent increased to ¥3,606 million, up 3.6% year on year.

With the continued strong orders from expressway companies, we have been working on large-scale repairs as well as renewals such as replacement of deck slabs. The expressway companies accounted for 41.5% of construction orders received during the first half and increased to 53.9% of the order backlog as of December 31, 2017. However, the expressway companies accounted for only 29.7% of first half sales, about the same as one year earlier and well below the share of orders and the backlog. This is because time is required to post sales from large-scale construction orders with multi-year construction periods, due to detailed designing and preparation for construction, etc. after receiving orders. The ratio of expressway company sales to total sales is expected to rise in the future as these projects slowly contribute to sales.

Regarding the full-year consolidated financial results forecast, we have revised sales upward from ¥57,000 million to ¥58,800 million, the operating profit from ¥10,300 million to ¥10,600 million and the profit attributable to owners of parent from ¥7,200 million to ¥7,300 million, in view of a strong order backlog and a favorable environment for orders received. Since the supplementary budget for fiscal 2017 and the proposed general account budget for fiscal 2018 of the Japanese government both include expenditures for disaster prevention and risk reduction projects as well as expenditures for the strategic maintenance and replacement of Japan’s aging infrastructure, construction orders from the national and local governments are expected to remain stable. Balancing orders from governments with large-scale orders from expressway companies, we will continue to promote an optimal strategy to receive orders.

“Inheriting and passing on social infrastructure to the next generation in good condition” is the mission that underlies all our activities. As a leading company in the infrastructure maintenance business, we have a firm commitment to working even harder to meet the high expectations of our society. We sincerely ask for your continued understanding and support as we take the actions needed to accomplish our goals.

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