To the Shareholders of Fukuda Corporation

FUKUDAR E P O R T

Annual Report forthe 95th Term
January 1, 2021 – December 31, 2021

Celebrating 120 years of founding

Fukuda Corporation
Stock code: 1899

Introduction

We will plant our roots in the local region
and build strong bonds with our multiple
stakeholders that go beyond the region.
We would like to take this opportunity to express our sincere
gratitude to all of our shareholders for your continuing support.
We would also like to express our deepest condolences tothose who have lost their lives due to coronavirus disease (COVID19) and to the families they have left behind, and we pray for the
Katsuyuki Fukuda
Masanori Araaki
earliest recovery of those still affected.
Chairman &President &Representative Director
Representative Director
In addition, we would like to extend our sincere gratitude to allof the government agencies and the medical professionals who
are fighting on the frontline to prevent the spread of infection.
We hereby present our business results for the 95th term ended on December 31, 2021.
By upholding the basic principle of “Creating an environment where people, nature and society can coexist” andadhering to the Fukuda Group Spirit of “Always sincere from now until the next century and beyond,” the Fukuda Groupdraws on its comprehensive strengths and sincerity to form strong bonds with those that we love and cherish, in order toprotect their lives and livelihoods. The Company’s management philosophy is: “To value people and the environment, andaim to create inspirational value based on a corporate structure designed to face challenges.” To this end, the entire
company is working together as one, in order to build strong bonds with all of our stakeholders, including our customers,
shareholders, business partners, local community and employees.
The Company’s business results for the fiscal year under review are shown below. While today’s increasingly global
society is fraught with unexpected risks, we will aim to enhance our corporate value and maintain the Group’s
management base as a united corporate group so that we may further continue to meet the expectations of ourshareholders.
We sincerely hope you will grant us your continued support and guidance going forward.
March 2022
Financial Highlights
Net sales
182,088(Unit: Million yen)

185,764

179,846

155,000(Forecast)

93rd term 94th term 95th term 96th term

1

Operating income
8,055

8,905

(Unit: Million yen)

8,891
6,200

Ordinary income
8,350

9,038

(Unit: Million yen)

9,147
6,400

(Forecast)(Forecast)

93rd term 94th term 95th term 96th term

93rd term 94th term 95th term 96th term

Business environment for the fiscal year under review
Although the spread of COVID-19 led to restrictions and stagnation in economic activity, the Japanese economy gradually started torecover owing to the progress of vaccination and the effects of various infection prevention measures. However, since the beginning of
this year, COVID-19 variants have spread rapidly, and the economy constantly fluctuated between upturns and downturns. In terms ofcorporate earnings, while some industries experienced favorable business conditions, lifestyle-related service industries such as theaccommodation business and store retailing business continued to face a harsh business environment. Regarding personal consumption,although recovery was seen towards the end of last year due to a decrease in the number of infections, consumption seems to havereverted to a downward trend as a result of the issuance of semi-state of emergency measures due to the spread of COVID-19 variants.
In the construction industry, for public investment in construction, demand was robust for disaster prevention measures andmaintenance and renewal works on aging facilities. Meanwhile, in anticipation of a post-COVID society, investment in construction by theprivate sector is gradually recovering. However, the recovery brought about by such sentiments falls far below pre-COVID levels, and theorder receiving environment remains severe.
Consolidated business performance for the fiscal year under review
The consolidated business results for the fiscal year under review were as follows. Net sales decreased by 3.2% year on year to slightly
more than ¥179.8 billion, due to a year-on-year decrease in orders received for the construction business, although the construction ofprojects on hand progressed smoothly without being affected by the spread of COVID-19, and sales in the real estate business increased.
In terms of profit, gross profit decreased by 1.7% year on year to slightly more than ¥18.7 billion due to the decrease in net sales, inspite of a contribution from an increase in gross profit margins mainly due to the completion of highly profitable construction properties,
and the fact that potential losses attributable to the COVID-19 pandemic, which we had feared, did not materialize. Operating income
decreased 0.2% year on year to slightly more than ¥8.8 billion, due to a decrease in selling, general and administrative expenses resulting
mainly from the conclusion of “amortization of goodwill,” which was recorded until the previous fiscal year.
Mainly owing to an increase in dividend income and a decrease in provision of allowance for doubtful accounts, non-operating income
and expenses contributed to revenue, and ordinary income increased by 1.2% year on year to slightly more than ¥9.1 billion. However,net income attributable to owners of the parent decreased by 1.9% year on year to slightly more than ¥5.8 billion, mainly due to therecording of loss on valuation of shares of subsidiaries and associates, and an increase in impairment losses.
Outlook for the next fiscal year
Going forward, in the construction industry, although the budget for national resilience has been secured, investment in public works
construction in local regions is expected to decline as authorities are obliged to allocate a large budget for infectious disease measures. In
addition, new capital investment is predicted to remain at a low level in the meantime due to a sharp decline in both investment inconstruction by the private sector and construction of accommodation facilities, as office buildings undergo changes in workplaces andworkstyles.
Nonetheless, even under such circumstances, we are striving to obtain orders in booming fields such as the logistics facilities field, forwhich demand is expected to grow owing to robust e-commerce transactions, and the renewable energy-related facilities field aimed at
the realization of a decarbonized society.
In response to such an environment, we have formulated the new “Medium-Term Business Plan 2025,” with 2022 as the first fiscal yearof the plan. Precisely because we face a rapidly changing society, we will plant our roots in the local region and further strengthen our
relationships with multiple stakeholders through conducting balanced business activities that go beyond the region.

Net income attributable to owners of the parent
5,475

5,979

(Unit: Million yen)Orders (non-consolidated)
120,847

5,864

105,000

84,442(Forecast)

93rd term

94th term

95th term

96th term(Forecast)

98,354

4,100(Unit: Million yen)

93rd term

94th term

95th term

96th term2Medium-Term Business Plan 2025
Customers(businesses andindividuals)
Shareholders
andinvestors

Administrative
agencies

Other businesses
in the same industry,groups andorganizations

Employees(families andretirees)

Business
partners

Environment
and
local
communities

Planting our roots in thelocal region and building
strong bonds with ourmultiple stakeholders that
go beyond the region
This year, as the Group enters the final phase of its
long-term vision for the next decade, the MediumTerm Business Plan 2025 has been established.

Long-term Vision 2025
A century of history and tradition;
New challenges for the next 100 years

The Group’s Future Ideal

Previous
Medium-TermBusiness Plan
2021
 ransform the businessT
portfolio
Create new revenue
basesSecure and diversify
talent3

New MediumTerm Business
Plan 2025
Aiming to enhance the“quality” of the Groupso as to achievesustained growth overthe next 100 years

 evelop nation-wide through strong
Dconsolidated management, to be more thanjust a regional construction company
Create customer satisfaction through quality
and safetyBe a corporate group with advanced
technical and proposal capabilities
Secure superior talent and develop an
environment where they can flourish
Establish win-win relationships with all
stakeholders

Basic Policies
Evolution and deeper development of mainstay businesses (construction and real estate)- Conducting more strengthening efforts and pursuing possibilities Establishment of the sincere brand image of the Fukuda Group- Strengthening our sales capabilities through trust Strengthening and ensuring safety and quality
Enrichment and growth of human resources- Development of diverse foundations that will support the organization ESG management for the enhancement of corporate value
Performance Targets/Targets for Financial Indicators
Net sales…………¥185.0 billion
Operating income… ¥8.4 billion
Ratio of operating income to net sales…… 4.5%
Capital adequacy ratio…………50.0%
ROE……………… Around 8.0%

Dividend payout ratio… 20.0% or more

Investment Plan
Productivity improvements, R&D: ¥1.8
billionEnvironment-related
investments, BCP
Total investment
investments, etc.: ¥4.2
billionbillionamount: ¥7.5

DX-related investments: ¥0.7 billion

HR-related investments: ¥0.8 billion

4

Main projects completed in the fiscal year under review
Construction

5

Niigata City

Urawa-misono Specified Purpose Company

Katahigashi Elementary School Relocation Reconstruction Project(Niigata Prefecture)

Tentative name: DPL Urawa-misono Construction Project (Saitama Prefecture)

DAIWA HOUSE INDUSTRY CO., LTD.

kyoritsu Estate Co., Ltd

Tentative name: Kasugai Shopping Center Construction Project(Aichi Prefecture)

Tentative name: Onyado Nono Yodoyabashi Construction Project(Osaka Prefecture)

Tamahime Group Aomori

ANABUKI KOSAN INC.

Tentative name: Grande Vierge Shin-Aomori Project (Aomori Prefecture)

Tentative name: Alpha States Sumiyoshi II Construction Project(Nagasaki Prefecture)Civil Engineering

Ministry of Land, Infrastructure, Transport andTourism Hokuriku Regional Development Bureau
Shinanogawa River Downstream East Niigata District River Channel Excavating and Shinkocho Yasuragi Embankment Exterior Construction Project Part 9 (Niigata Prefecture)

Niigata Prefecture

Nagaoka City

Niigata Port (Nishi Ko-ku) Waste Landfill Revetment Management
Dredging Soil and Sand Basin Embankment Construction Project
Part 8 (Niigata Prefecture)

Nagaoka City New Non-industrial Waste Final Disposal Site
(tentative name) Construction Project (Niigata Prefecture)

Chiba Prefecture

Hitachi, Ltd.

MM BRIDGE CO., LTD.

Comprehensive Social Capital Grant Construction(Tentative name: Tsuchiyabashi Main Line P10, P11 Bridge Footing)(Chiba Prefecture)

SGET Hiroshima Mega Solar Power Plant Construction Project(Hiroshima Prefecture)

Dai-ichi Shirakawa Bridge Restoration Project (Part 2-1)
(Kumamoto Prefecture)

Main orders and completed projects for the fiscal year under review
OrdersCompleted projects

Toshiba Energy Systems & Solutions Corporation

Urawa-misono Specified Purpose Company

Nasu Mega Solar Power Plant Construction Project

Tentative name: DPL Urawa-misono Construction Project

DAIWA HOUSE INDUSTRY CO., LTD.

DAIWA HOUSE INDUSTRY CO., LTD.

Tentative name: Nagareyama Otakanomori B35 Block Commercial Facility
Construction Project

Tentative name: Kasugai Shopping Center Construction Project

Shinmachi-Machizukuri Co., Ltd.

Tentative name: AEON MALL Noshiro Construction Project

Building Construction Project in line with Aomori Shinmachi 1-chome
District Excellent Building Development Project

Asahi Kasei Realty & Residence Corporation
Tentative name: Pearl Fukuoka Rebuilding Plan Construction Project

AEON TOWN Co., Ltd.
Miyagi Prefecture
Oritategawa Outer River Disaster Recovery Construction Project6

Topics
Contributing to Society through Collaborations with Local Communities
TOPICS

1

Letter of Appreciation from the “Niigata
University Supporter Club”
The Company hasreceived a letter ofappreciation from Niigata
University for its donation
to the “Niigata University
Supporter Club,” for which
the Company acts as the
managing company.
Donations are used tosupport students, toimprove the quality ofeducation and research,and to enhance social
contribution activities.

Building a Sustainable Future with Our Business Partners
TOPICS

2

Announcement of “Partnership Formation
Declaration”

In addition to our efforts to improve added value throughout theentire supply chain, which includes our business partners, we haveannounced the “Partnership Formation Declaration” with the aim ofcreating coexistence and co-prosperity with our business partners,
through collaborations that transcend existing business relationships
and the size of companies.

Contributing to the Creation of Social Infrastructure with Solid Technological Capabilities
TOPICS

3

Certified as a “Company with Excellent Record of Construction Projects” and a “Company with
Excellent Record of Construction Projects Utilizing ICT”
The Company received certification and awards as a Company
with Excellent Record of Construction Projects and a Company
with Excellent Record of Construction Projects Utilizing ICT for
Fiscal 2021 from the Hokuriku Bureau of the Ministry of Land,
Infrastructure, Transport and Tourism. This is the ninth consecutive
year that the Company has received certification as a Company
with Excellent Record of Construction Projects, and the third time it
has received certification as a Company with Excellent Record ofConstruction Projects Utilizing ICT, following the certification in
2020. The certifications show that the technical and proposal
capabilities of the Company, in regard to construction
management, quality control and such, have been highly
acclaimed. We will continue to strive to further improve ourtechnologies in construction and quality control.

7

Consolidated Financial Statements
Consolidated Balance Sheet (Unit: Million yen, rounded down to the nearest million yen)

Consolidated Statement of Income (Unit: Million yen, rounded down to the nearest million yen)

95th term
94th term(as of December 31, 2021) (as of December 31, 2020)

95th term
94th term(as of December 31, 2021) (January 1, 2020 - December 31, 2020)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Non-operating expenses
Ordinary income
Extraordinary income
Extraordinary losses
Income before income taxes and minority interests
Income taxes – current
Income taxes – deferred
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent

AssetsCurrent assets

95,462102,288

Non-current assets

35,29235,273

Total assets

130,755

137,562

Current liabilities

47,02458,717

Non-current liabilities

7,318

7,508

Total liabilities

54,342

66,22675,13170,170

Accumulated other comprehensive income

636

550

Valuation difference on available-for-sale securities

677

655

Revaluation reserve for land

112

87

Remeasurements of defined benefit plans

72

17

643

615

Total net assets

76,412

71,335

Total liabilities and net assets

130,755

137,562

Liabilities

Net assets
Shareholders’ equity

Non-controlling interests

179,846
161,10218,744
9,852
8,891
397
141
9,147
64
413
8,799
2,748
138
5,911
47
5,864

185,764
166,692
19,071
10,165
8,905
337
205
9,038
151
365
8,824
2,718
80
6,026
47
5,979

Consolidated Statement of Cash Flows (Unit: Million yen, rounded down to the nearest million yen)
95th term
94th term(as of December 31, 2021) (January 1, 2020 - December 31, 2020)

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

7,802
1,505
6,128
168
23,11623,285

6,909
2,193
4,680
35
23,171
23,116

Consolidated Statement of Changes in Equity (January 1, 2021 – December 31, 2021) (Unit: Million yen, rounded down to the nearest million yen)
Capitalstock

Balance as of January 1, 2021
Changes of items during the period
Dividends of surplus
Net income attributable to owners of the parent
Purchase of treasury shares
Disposal of treasury shares
Change of scope of consolidation
Reversal of revaluation reserve for land
Net changes of items during the period
other than shareholders’ equity
Total changes of items during the period
Balance as of December 31, 2021

5,158

Shareholders’ equity
CapitalRetained
Treasury
surplusearnings
shares6,169

61,13370,170

39
60

946
5,864
39
60

946
5,864
39
60

25

25

25

5,158

0
6,169

4,941
66,075

20
2,271

4,961
75,131

655

87

17

550

615

Total net
assets

2,291

946
5,864
0

Accumulated other comprehensive income
NonTotal shareholders’ Valuation difference on Revaluation Remeasurements of Accumulated other controlling
equityavailable-for-sale securities reserve for land defined benefit plans comprehensive income interests

71,335

22

25

90

86

28

114

22
677

25
112

90
72

86
636

28
643

5,076
76,4128

Business Overview/Subsidiaries
In addition to the construction orders and projects undertaken

Construction by the Company, FUKUDA ROAD CONSTRUCTION CO., LTD.
businessand 22 other subsidiaries, and TAKAKEN CO., LTD. and four
affiliates are also engaged in construction orders and¥174,789million otherprojects, as well as the rental and manufacturing/sales ofRatio of net sales by
consolidated business

97.2%

construction-related materials and equipment, some of which
are ordered by the Company.

Real estatebusiness¥4,393million

In addition to the business undertaken by the Company in realestate sales, leasing and development, FUKUDA ASSET &SERVICE CO., LTD. and three other subsidiaries, as well as anaffiliate, TAKAKEN CO., LTD., and another affiliate are also
engaged in the real estate business.

Otherbusiness¥662million

FUKUDA ROAD CONSTRUCTION CO., LTD. and four othersubsidiaries are engaged in the lease, manufacture and sale ofproducts other than those related to construction projects.
Another subsidiary, Design Workshop Co., Ltd., is engaged in
the management of welfare facilities.

2.4%

0.4%
Pabig Aizu Co., Ltd.

9

Pabig Aizu Co., Ltd. wasestablished in November 2002,
and this year marks its 20th
anniversary. In fact, its heritage
stretches even further back.
Since the establishment of its
predecessor, the Wakamatsu
Construction Office of Fukuda
Road Co., Ltd. in May 1980,
Pabig Aizu has succeeded its
business, which focuses on
operations in the paving
construction business, with great
support from customers in the
Aizu region.
Pabig Aizu’s management
philosophy is: “To continue being
a company that is trusted by all
customers and the local
community, where employees feelproud and find work rewarding.”
Under this philosophy, it willcontinue striving to develop its
business by leveraging the highlevel of technological capabilities it
has accumulated and mutual
collaborations with Group
companies as its key advantages.

Representative	Koji Ikeda, Representative Director
Address	374-1 Aza Ishiyama, Hatta, Kawahigashimachi, Aizuwakamatsu City, Fukushima
Prefecture
Establishment November 2002
Capital¥10 million
Employees
17
Websitehttps://www.pabig-aizu.co.jp/
Business	General paving construction business with afocus on asphalt paving

Corporate Data
Company Profile (as of December 31, 2021)
Established:

January 1902

Founded:December 1927

Capital:5,158,408,496 yen

Employees:

897

Consolidated subsidiaries: 16 (including FUKUDA ROAD CONSTRUCTION CO., LTD.)
Main offices:

Head office3-10 Ichibanboridoricho, Chuo-ku, Niigata
Tel: 025-266-9111 (Main line)
Main Branch & Branches
Niigata Main Branch (Chuo-ku, Niigata),
Tokyo Main Branch (Chiyoda-ku, Tokyo),
Tohoku Branch (Aoba-ku, Sendai),
Nagoya Branch (Naka-ku, Nagoya),
Osaka Branch (Kita-ku, Osaka),
Kyushu Branch (Hakata-ku, Fukuoka),
Chuetsu Branch (Nagaoka, Niigata Prefecture),
Hokkaido Branch (Chuo-ku, Sapporo)
Sales Offices
Morioka, Chiba, Yokohama, Murakami,
Jouetsu, Hiroshima and six other locations

Main subsidiaries: FUKUDA ROAD CONSTRUCTION CO., LTD.
KOWA Co., Ltd.
FUKUDA HOUSING CO., LTD.
RECS CORPORATIONFUKUDA ASSET & SERVICE CO., LTD.
NigataZouen Corporation
FUKUDA RENEWAL CORPORATION
Kita Nihon Construction Material Leasing Co., Ltd.
Re Earth Corporation

Directors and Executive Officers (as of March 29, 2022)
Chairman &Representative Director Katsuyuki Fukuda
Chairman of the Board
President &Representative Director Masanori Araaki
President of the Board
Director &Managing
Hideaki Saito
Executive Officer
Director &Managing
Yutaka Yamaga
Executive Officer
Director &Managing
Shinichi Otsuka
Executive Officer
Director &Executive Officer Katsuhiko Iwasaki

Kenichi Yazawa
Yoshinao Nakata
Vice President of the Board Hideaki Fujiyama
Director
Director

Senior Executive
Officer
Senior Executive
Officer

Kiyomi Ozaki
Hiroyuki Oiki

Senior Executive
Officer
Senior Executive
Officer

Mikio Yamamoto

Executive Officer

Koichi Yakuwa
Akihiko Ogawa
Hiroshi Shimizu
Tsuyoshi Tamiya
Kazunori Konno
Shuichi Sunada
Toshio Omi

Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Satoshi Yugami

Full-Time Audit &Supervisory Board Shoichi Takakuwa
MemberFull-Time Audit &Supervisory Board Takeshi Yamamoto
MemberAudit &
Supervisory Board Tetsuya Sunada
MemberAudit &
Supervisory Board Michiaki Miyajima
MemberNotes:
1.	Messrs. Kenichi Yazawa and Yoshinao Nakata are Outside Directors pursuant to Article 2,
Paragraph 15 of the Companies Act.
2.	Messrs. Tetsuya Sunada and Michiaki Miyajima are Outside Audit & Supervisory Board
Members pursuant to Article 2, Paragraph 16 of the Companies Act.

Stock Information (as of December 31, 2021)
Total Number of Shares Authorized to be Issued: 20,000,000 shares
Total Number of Shares Outstanding (excluding treasury shares):
Number of Shareholders:

8,615,409 shares
6,044

Major Shareholders
Name of shareholder

Number of shares Shareholding
held (thousands)
ratio (%)

(Public Interest Incorporated Foundation)
Fukuda Ikueikai

688

8.0

The Master Trust Bank of Japan, Ltd.
(trust account)

623

7.2

Naomi Fukuda

431

5.0

Daishi Hokuetsu Bank, Ltd.

419

4.9

Kazuko Ozawa

321

3.7

Note. Shareholding ratio is calculated after deducting the number of treasury shares (372,702
shares). The number of treasury shares does not include the shares of the Company(92,200 shares) held by Trust & Custody Services Bank, Ltd. (trust account E) as thetrust assets of the Employee Stock Ownership Plan (J-ESOP) and Board Benefit Trust(BBT).

10

Information for Shareholders
Fiscal Year:

From January 1 to December 31

Ordinary General March
Meeting of
Shareholders:Record Date

Stock Transfer Agent /Account Management
Institution for Special
Accounts:

Ordinary General Meeting of Shareholders:
December 31
Year-End Dividend: December 31
Interim Dividend: June 30

Shareholder Benefit Program
To express our gratitude for the constant support of ourshareholders and with the aim of encouraging shareholders tomaintain their shareholding over a long period, the Company
has introduced a Shareholder Benefit Program.
Number ofshares held

Shareholder
benefit

200 shares A ¥2,000
or moreQUO card

Mitsubishi UFJ Trust and Banking Corporation
Contact Information
Mitsubishi UFJ Trust and Banking Corporation
Stock Transfer Agency Department
1-1 Nikkocho, Fuchu, Tokyo
Tel: 0120-232-711 (Toll-free)
Addressee
Shin-Tokyo PostOffice,Po box No.29,
Tokyo 137-8081 Japan

Number of
Shares Per Unit:

100

Listed on:First Section of Tokyo Stock Exchange

200 shares A ¥5,000
or moreQUO card

Benefit criteria
Shareholder benefit presented inaccordance with the details
registered or recorded in the
Shareholder Registry as ofDecember 31 each year.
Shareholder benefit presented inaccordance with the details(registered or recorded three times
or more in the Shareholder
Registry) for shares held for one
year or more.

Presentation period: Scheduled to be sent in late March each year

Method of Public Public notices will be made electronically.
Notice:However, when electronic public notices cannot
be made due to circumstances beyond ourcontrol, we will post a notice in the Nihon Keizai
Shimbun.
URL for Public Notices: https://www.fkd.co.jp/
Notes:
Please contact the securities company where you have your accountregarding procedures for matters such as change of address ofshareholders and requests for purchase of shares. These procedures are
not handled by the Stock Transfer Agent (Mitsubishi UFJ Trust andBanking Corporation). Unclaimed dividends are payable at the main
office/branches of Mitsubishi UFJ Trust and Banking Corporation.
Procedures related to shares recorded in special accounts are handledby Mitsubishi UFJ Trust and Banking Corporation as the accountmanagement institution. Shareholders are therefore requested to contact
the account management institution (Mitsubishi UFJ Trust and Banking
Corporation) for the aforementioned special accounts.
The services are also provided at nationwide branches of Mitsubishi UFJ
Trust and Banking Corporation.

FUKUDA Corporation Searchhttps://www.fkd.co.jp/

Head office: 3-10 Ichibanboridoricho,
Chuo-ku, Niigata
Tel: 025-266-9111 (Main line)