Under its new Medium-Term Business Plan, the Kajima Group aims to establish a stable earnings foundation that can weather the volatile and changing business environment by further strengthening competitiveness and profitability in our core businesses: civil engineering, building construction and real estate development.

Results for the Fiscal Year Ended March 31, 2009

The Japanese construction industry faced an even more challenging operating environment in the fiscal year ended March 31, 2009. In addition to worldwide volatility in material prices and exchange rates, domestic construction demand continued to decline, especially toward the end of the period in the private sector.

The Kajima Group has carried out its three-year Medium-Term Business Plan since the fiscal year ended March 2007, with a strategic emphasis on deepening our core construction business and enhancing our technological and sales capabilities. However, the profitability of Kajima Corporation’s construction business has deteriorated significantly due to dramatic changes in the market structure, and we were unable to achieve the plan’s targets.

Under these conditions, consolidated construction contract awards decreased 5.5 percent to ¥1,585.4 billion, as a large increase in government orders for civil engineering work was offset by other factors, including a substantial decline in building construction at Kajima Corporation following the increase in the previous year. Consolidated revenues rose 2.9 percent to ¥1,948.5 billion, mainly due to an increase in building construction work at the parent company.

Operating income rose 8.8 percent to ¥19.7 billion. It did not rebound strongly mainly due to the downturn in real estate markets overseas and continued stagnation of the gross profit margin of Kajima Corporation's construction business. We recorded consolidated net loss of ¥6.3 billion, compared to net income of ¥40.7 billion in the previous fiscal year, due to a provision for doubtful accounts and valuation loss on marketable and investment securities against the backdrop of credit concerns and weak stock prices, and loss caused by inappropriate transactions at a subsidiary.

Policies for the Fiscal Year Ending March 31, 2010

For the fiscal year ending March 31, 2010, there are concerns that the global recession will be prolonged, and the Japanese construction market will continue to face an unavoidable decline in private-sector demand. Therefore, we expect the difficult operating environment to continue.

In these conditions, we have launched a new Medium-Term Business Plan in April 2009 for the three years ending March 2012 to establish a foundation for stable earnings that can weather the volatile and changing business environment.

The aim of the plan is to lay robust foundations for becoming a truly profitable enterprise by further strengthening the competitiveness and profitability of our core businesses: civil engineering, building construction and real estate development.

To maximize profits in each business, we will ensure closer cooperation among sales, design, and construction units and optimally allocate company resources. Measures to ensure reasonable profitability will include improving technology-related proposal capabilities, enhancing estimate and procurement functions, and exercising prudence in obtaining new orders.

Furthermore, we aim to raise profitability with measures ranging from rationalizing production, strengthening operational and production-related units including subcontractors and vendors to increasing the efficiency of administrative and overhead-related units, beefing up production-support functions and undertaking strategic research and technological development.

With these initiatives, we will steadily build up profits and thereby increase equity as well as reduce interest-bearing debt. With enhanced equity and less debt, we will have higher tolerance for risks associated with real estate development and overseas business.

Increasing Corporate Value

Our basic policy is to stably provide year-end dividends in line with our earnings while securing internal reserves to maintain a sound business foundation.

Taking into account the Group’s financial performance and business foundation, we reduced our annual dividends for the fiscal year ended March 31, 2009 to ¥6.00 per share, a decrease of ¥1.00 from the previous fiscal year.

The Kajima Group is committed to increasing its corporate value by steadily executing the new Medium-Term Business Plan, based on customer-oriented management and rigorous compliance.

We will continue working to justify the steadfast support of our stockholders and other stakeholders.

July 2009

Mitsuyoshi Nakamura
President, Representative Director