August 13, 2024

JGC Holdings Corporation

Q&A from the Telephone Earnings Release Conference (held on August 8, 2024)
On First Quarter Financial Results for FY2024 Ending March 31, 2025

This content is based on information available on the date of the telephone earnings release conference (August 8, 2024).
1.

Financial results for the first quarter of FY2024 and forecasts for orders
Question

AnswerRegarding the performance for the first quarter, is it correct tounderstand that there were no variable factors such as additional
cost allocations for ongoing projects or the return of contingency(profit improvement)?

Given that it was the first quarter, there were no significant changes
from the initial forecast announced in May this year.

Although there were no major variable factors, considering thesituation where the first quarter showed a steady progress rate
against the full-year performance forecast, I think the impact on thefirst quarter’s performance was due to the exchange rate. I would
like to know what extent the impact of the exchange rate (yendepreciation) was.

The assumed exchange rate used for the full-year forecast was

USDJPY145. However, at the end of the first quarter (end of June), it

was USDJPY161, which resulted in a positive impact on performancedue to the exchange rate. Specifically, against the full-year forecast’s
expected gross profit margin of 7.0%, the actual result for the firstquarter was 7.6%. This increase of 0.6% points translates toapproximately 1.2 billion JPY positive impact to gross profit. Of thisamount, about 800 million JPY was gained from the exchange rate
fluctuation which was more than expected. The remaining

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QuestionAnswer
approximately 400 million JPY is due to the higher progress rate of

the functional materials manufacturing business’s first-quarter sales

compared to the full-year forecast for the same business, resulting in
an increase in the proportion of the high-profit-margin functional

materials manufacturing business in the sales composition between
segments.
If we exclude the impact of provision for loss on construction

contracts recorded in the fiscal year 2023, it is presumed that thegross profit margin was higher compared to the same period of theprevious year. Was the gross profit margin relatively high for

projects that did not record provision for loss on constructioncontracts?

Regarding the order status, I would like to know the order amountfor the LNG project in the United Arab Emirates (UAE) that wasordered in the first quarter. Additionally, I would like to be informed
about the progress of other projects that are expected to be orderedin the fiscal year 2024.

We do not see gross profit margin for projects other than loss
position projects was particularly high. Overall, there has been no
significant change compared to the same period last year. On theother hand, for new projects to be awarded in fiscal year 2024 andbeyond, including those awarded in the first quarter, pricing forcontracts is being made based on estimates that take into accountthe increased costs such as s employee salary improvements.
Therefore, it is expected that these projects will contribute to therecovery of the gross profit margin in the future.
The contract amount for this project is not disclosed, but the main
contract was accounted for in the first quarter. Currently,
negotiations with the client are underway regarding the option
items of the contract, and if these are finalized, an additional
increase can be expected.

In addition, other overseas projects expected to be awarded in fiscal
year 2024 are steadily progressing in negotiations with clients. While
the timing of the orders cannot be stated clearly, it is hoped thatthey can be awarded sequentially, aiming for the second half of thefiscal year. Domestically, in the first quarter, orders were mainly for
maintenance work and oil-refinery upgrade/modification projects.

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Question

2.

AnswerMoving forward, the goal is to accumulate orders for pharmaceuticalmanufacturing plants, hospitals, and food factories, each worth
several billion yen, and to achieve the order target.

Situation of ongoing projects
Question
I would like to know the situation of ongoing projects which
provision for loss on construction contracts were recorded in thefiscal year 2023.

AnswerThere are no significant changes in the profit and loss of eachproject. The situation of each project is as follows:- Indonesia Gas Processing Plant and Gas Pipeline Construction
Project:

The construction work is almost finished. The commissioning phaseis also in its final stages, and completion is planned within this year.
- Indonesia LNG Receiving Terminal Construction Project:

The design work is almost finished. In the procurement work, theordering of major equipment has completed. The construction work
is at its peak.
- Saudi Arabia NGL Plant Enhancement Project:

The design work is generally finished. At the construction site,equipment installation and piping work are underway.
- Thailand Chemical Plant Construction Project:

The design work is in its final stages. In the procurement work, the3 / 4

Question

Answerordering work is almost finished. All contracts with subcontractors
for the construction work have been completed. At the construction
site, pile driving work is completed, steel structure and piping work
are progressing, and equipment installation has begun.
- Saudi Arabia Crude Oil and Gas Separation Facility Construction
Project:

The design work is almost finished and is responding to commentsfrom the client. In the procurement work, the delivery of equipment
has started, and the loading of equipment is expected to peaktowards the end of the year. The construction work is progressing
with paving work for the start of equipment installation, in addition
to civil engineering and steel structuring.
Are there any risks of additional costs arising in the future forprojects other than the projects which provision for loss on
construction contracts were recorded in the fiscal year 2023? Inparticular, what is the situation with projects in Iraq and North
America where the order backlog is large?

At present, there are no particularly significant problems, but we arealso carefully monitoring the trends of each project and executing
with caution. The Iraq oil-refinery modernization Project isprogressing smoothly, and at this point, we have not heard of any
risks of additional costs arising. The LNG Project in Canada is in thefinal stages of on-site construction towards completion. The US
Ethylene Expansion Project still has a long way to go, but there areno major fluctuations in profitability at the moment.
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