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Rokuro Ishikawa,
Chairman |
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Sadao Umeda,
President |
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During fiscal 2000, ended March
31, 2000, Japan's economy began a gradual trend of improvement due
to the effects of government policies, although positive developments
were not seen regarding such factors as the employment situation
and personal consumption. Consequently, prospects for full-scale
economic recovery remained bleak.
Trends were mixed in the domestic construction market, which is
Kajima Corporation's principal business field. While positive signs
were seen in certain sectors of the market, such as redevelopment
projects in central urban districts, the overall trend continued
to be one of market contraction, and competition to obtain orders
became still more intense.
Kajima's consolidated performance amid this operating environment
was as follows. Primarily because a recent downtrend in orders has
reduced revenues in construction operations, declines were seen
in revenues of the parent company and overseas Group companies.
As a result of the revision of Japanese regulations related to financial
statements, however, Kajima Road Co., Ltd., and six other companies
were newly included within the scope of consolidated accounts as
consolidated subsidiaries. The addition of those companies' sales
caused consolidated revenues to reach \1,727.9 billion, up 4.2%
from the previous fiscal year.
Principally reflecting the rising profitability of overseas subsidiaries,
which achieved strong performances through the sale of real estate
assets and other moves, Kajima's operating income surged 55.5%,
to more than \51.6 billion. Having posted a non-consolidated net
loss in the previous fiscal year, the parent company was able to
generate \7.6 billion in net income during fiscal 2000. This and
the improving profitability of Group companies enabled a momentous
improvement in consolidated net profitability―a shift from a net
loss of \198.6 billion in the previous period to \9.0 billion of
net income in fiscal 2000.
Progress in Implementing the New Three-Year
Plan
Fiscal 2000 was the second year of Kajima's New Three-Year Plan,
a management plan which covers the three years from fiscal 1999
through fiscal 2001. This plan is aimed at increasing Kajima's
abilities for generating a sufficient and stable profit amid harsh
market conditions of the type that are currently surrounding the
Company's operations. To attain this goal, the Company took diverse
measures under the direction of a New Three-Year Plan Implementation
Committee, which is chaired by President Sadao Umeda. These measures
included those to strengthen marketing operations, reduce costs,
enhance the Company's financial position, shrink the overall size
of the Company's work force, streamline the corporate organization,
and increase the efficiency of R&D.
Points to be Emphasized in Fiscal 2001
During fiscal 2001, which is the last year of the New Three-Year
Plan, the Company will be emphasizing implementation of the following
measures as means of achieving the plan's overall objectives.
Utilizing the Company's Comprehensive Resources to Bolster
Order-Gathering Capabilities―Kajima is shifting marketing
and other staff to emphasized fields and front-line marketing
positions while also proceeding with the organizational streamlining
of administrative and support departments and the reduction of
staffing requirements.
To increase capabilities for obtaining orders that make maximum
use of Kajima's strengths with respect to design-build methods,
the Company is developing and proposing design-build techniques
and know-how that meet customer needs for each type of building.
With an eye to expanding the range of its profit-making opportunities,
Kajima is stepping up its efforts related to environmental protection
and building life-cycle management. The Company is also proactively
developing private finance initiative (PFI) business involving
local government bodies and project management/construction management
(PM/CM) business related to new project delivery methodologies.
Enhancing the Profitability of Real Estate Development Business
Systems―While continuing to selectively undertake strategically
emphasized large-scale complex projects that allow for it to use
its special know-how, Kajima will make greater use of securitization
and other methods for reducing funding requirements and will work
to develop and expand the application of business schemes that
promote risk dispersal. In addition, the Company is moving to
develop and augment such fee-businesses as asset management and
consulting business.
Tightening the Focus and Increasing the Distinctiveness of
R&D―In response to changes in market environments and
customer needs, Kajima is emphasizing the development of technologies
that facilitate cost reductions and faster project implementation
as well as technologies related to such promising fields as environmental
protection, recycling, structural refurbishment, and urban infrastructure.
Laying and Broadening the Foundation for Information Technology
(IT)―Kajima is equipping the Group with information networks
and databases that are further accelerating the pace at which
main operations are being standardized and digitized, with the
goal of boosting competitiveness and management speed. The Company
is also proactively investigating the potentials for e-business
related to construction operations.
Enhancing Our Financial Position―In addition to continuing
to enhance and strengthen its financial position through such
efforts as those to adjust its asset portfolio, make better use
of assets, and reduce interest-bearing debt, Kajima is maintaining
a far-sighted perspective on such issues as the introduction of
international accounting standards.
Upgrading the Profitability of Domestic and Overseas Affiliates―Kajima
is proceeding with the revaluation of all Group subsidiaries and
affiliates based on those companies' profitability, growth potential,
and role with respect to the Group. Based on the results of this
reevaluation, the Company is making the necessary adjustments
and reorganizations.
In Preparation for the 21st Century
Japan's economy is undergoing a transitional stage between its
era of rapid growth, when volume considerations were paramount,
and a new era in which stable and harmonious growth is emphasized.
In the Kajima Group's principal market, the Japanese market for
construction services, it is projected that the scale of demand
will gradually decline over the medium-to-long term. Moreover,
it is expected that the nature of demand will change as a rising
share of demand is associated with structural maintenance and
renewal rather than new construction. Furthermore, the functions,
quality, and other characteristics of structures in demand are
becoming more diverse due to such socioeconomic trends as an increase
in the diversity of individuals' values, a rise in consciousness
of environmental issues, progress in IT, and demographic graying.
Against the backdrop of these progressive structural changes in
the construction industry's operating environment, the Kajima
Group is striving to adopt the kind of multifunctional management
systems that it believes general contractors will require during
the 21st century to provide a broad array of services and thereby
respond to a diverse range of customer requirements. This means
that the Group will define its main business area as encompassing
all stages of building life cycles, requiring capabilities ranging
from initial planning and study activities through design and
construction as well as post-construction management, maintenance,
renewal, and disposal. By building on its accumulated experience
and expertise while proactively pursuing R&D in key areas,
the Group intends to ensure that it has the capabilities needed
to supply top-quality services and increase the level of customer
satisfaction. Through its activities, the Group intends to provide
people with high-amenity living and working environments that
are exceptionally harmonious with regard to the natural environment.
This is the Kajima Group's social mission, and we also believe
that this approach is the key to the Group's sustained prosperity
and evolution over the long term.
We would like to thank our stockholders and associates for their
support and ask for their continued understanding and encouragement.
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