Regarding our forecast for the fiscal year 2023, which is the final year of our medium-term business plan, we expect that group net sales of 240 billion yen, operating income of 76 billion yen, and net income of 55 billion yen, will not be achieved.
2
There are three main reasons for the failure to achieve our numerical targets for operating income.
The first, regarding the "delay in the development of the production system," although the current Medium-Term Business Plan is aimed to secure the profit amount as a whole through increment of business volume on the premise to reduce the profitability of each project, due to delays in the realization of effectiveness of DX and other measures, we were unable to improve productivity as planned.
The second, regarding the "impact of several low-profitablelarge-scale construction projects," as a result of intense competition due to the industry-wide movement to secure the work volume in advance and enlargement of project scale after the Olympics-related demands have been ceased, several projects that had been awarded to us with lower profitability have pushed our profits down.
The third, regarding "delays in price pass-through," the profit margins were reduced due to the difficulty to pass the inflated construction material prices on to our contract prices in design-build projects that require longer time from contractor selection to the execution of the formal contract, and due to its failure to pass inflated crude oil prices on to its product prices in part of the Group companies.
3
Based on the above factors for not achieving our numerical targets, we would like to inform you of the measures we will take from this fiscal year for the next Medium-Term Business Plan.
Regarding "to secure appropriate business volume and rebuild the production system," we will promote the business with a focus on the balance between the work volume and profitability in consideration of the employees' working environment.
We will also reduce workloads and reorganize the work environment so that employees will be able to maximize their abilities while maintaining a high level of engagement from them as the overtime regulations is expected to be applied in the fiscal year 2024.
Reflecting on the decline in profitability due to intense competition after the Olympics, we are re-enforcing our "profit-oriented principle" through applying careful scrutiny procedures at the time of receiving orders, assigning human resources to the priority fields, and so on.
At the bottom line, we will persistently continue price pass-through negotiations for inflated prices with our clients in order to recover profit margins.
4
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Taisei Corporation published this content on 12 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 May 2023 07:32:17 UTC.
Taisei Corporation is one of the Japanese largest building and civil engineering works groups. Net sales break down by activity as follows:
- construction of infrastructures and buildings (90.7%): roads, highways, bridges, tunnels, dams, hospitals, airports, office buildings, homes, leisure centers, etc.;
- promotion and real estate assets management (8.6%);
- other (0.7%).
TAISEI CORPORATION 
