JGC Holdings Corporation (JGCCF) Q2 2023 Earnings Call

Investor webinar replay

Replay transcript excerpt

My name is Daguchi, General Manager of the Finance Unit. I will give you an overview of the first half results using the presentation material. Please turn to page 4. These are the three highlights from the first half results of FY23. Large-scale projects made progress as planned, and net sales were up year over year. Some projects, mainly executed by our overseas subsidiaries, required risk reviews, which temporarily lowered the profit margin in the first half of the fiscal year. Overseas results in new contracts remain sluggish, as we generally expect overseas projects to be awarded later in the fiscal year, while domestic project orders are steadily accumulating. Next on page 5, this is the consolidated income statement. Sales rose but profit fell over the previous year. Net sales rose by 51% year-over-year to 403.2 billion yen. Gross profit fell by 11% to 28.4 billion yen. Profit ratio declined by 4.9 points to 7.1%. This was due to lower profit in the total engineering segment. Operating profit was down by 31% to 13 billion yen. Ordinary profit fell 17% to 25.4 billion yen. The drop in ordinary income was smaller compared to that of OP due to an increase in interest income. Their income attributable to owners of the parent decreased 39% to 12.5 billion yen due to a higher effective tax rate caused by the losses in the overseas business. Page 6 shows the segment results. In the total engineering segment, net sales rose 133.7 billion yen year-over-year to 375.5 billion yen due to the progress of domestic projects related to clean energy and life science and overseas large-scale projects in Saudi Arabia and Iraq. However, segment profit decreased 5 billion yen year-on-year to 12.2 billion yen. Profit ratio also declined by 3.9 percentage points. I will explain why ...