Results for Q1, FY March 2019
Takamatsu Construction Group Co.,Ltd.
Securities Code ：1762
August 8, 2018

Forward-looking statements in this material is based on the information available to management at the time this report wasprepared. Actual results may differ significantly from this statement for number of reasons. In addition, this document isprepared as an information providing material to be used as a reference for investment decisions, and is not intended to ask
nor to request to purchase / sell our shares.

Our Market Environment Recognition towards March 2020 andGrowth Image of Takamatsu Construction Group
Same with Mid Term Plan disclosure of May 2017 except
for portions in RED. Same with disclosure of May 2018.

Environment
Recognition
Positive Factors■ We foresee three consecutive years ofdomestic construction investment
exceeding 53TJPY. (FY Mar 2018 thru FYMar 2020)■ We foresee high level of household #s to
be maintained in Tokyo-Nagoya-Osaka
Areas as well as continued high level of
new residence construction start-ups.
■ We foresee continued tight market forTokyo Metro Area’s construction ofcondominiums for rental purposes.

Negative Factors■ Domestic construction investment will
start to shrink after 2020, which is our final
year of Mid-Term Plan. Population
decrease will also accelerate.
■ Construction labor cost will increase as #of workers decrease.
■ There is risk of rapid decline of market for
condominiums for rental purpose due tointerest rate hike and / or decrease ofoccupancy rate.
■ Decrease of overall construction start-ups

Growth Image of Takamatsu Construction Group Towards FY Mar. 2020
1. We will create an organization which realizes expansion of orders and continued growth forconstruction of Tokyo Metropolitan condominiums for rental purpose as our core growth segment.
2. On the other hand, for civil engineering and government related businesses where we foresee flator negative growth for future years, we will aim to realize steady growth of market share as wellas to maintain high profit margins.
3. We will create management basis that enables realization of both of the above.
2©2018 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Results for Q1, FY 2019 March (Consolidated)
1.
2.
3.

Orders： △2.5% vs last year.
Revenue：＋3.1% vs last year. Grew 7 consecutive years, record high for 6 consecutive years as Q1.
Income： GP of Asunaro Aoki (unconsolidated) decreased due to last year’s numerous completionof profitable architectures.
Operating income decreased by 55.0% vs last year due to increased SG&A of both Groups.
Ordinary income decreased by 54.1% vs last year as well as 56.1% decrease of Net earnings.
Item (In Billion JPY)

FY2018/Mar Q1

FY2019/Mar Q1+/- （％）

Orders

69.367.5△2.5%

Revenue

52.5

54.1+3.1%

Gross Profit（% vs Revenue）

6.5

6.3（12.5%）（11.8%）△2.7%

1.90.8（3.8%）（1.7%）

2.0

0.9（3.8%）（1.7%）

1.0

0.4（2.0%）（0.9%）

Operating Income（% vs Revenue）
Ordinary Income（% vs Revenue）
Net earnings attributable to controllinginterest（% vs Revenue）△55.0%△54.1%△56.1%
3©2018 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

By-Segment・By-Group Split (Consolidated)
1. Orders decreased by 2.5% to 67.5BJPY. Architecture grew significantly vs last year due to strong Takamatsu Gr., but civil engineering decreased significantly.

2. Revenue increased 3.1% to 54.1BJPY, Takamatsu Gr. Flat vs last year. Aoki Asunaro Gr. grew in civil engineering but decreased in architecture.
As TCG, civil engineering grew by 20.3%, architecture dropped by 13.5%
3. Operating income decreased by 55.0% to 0.8BJPY. Asunaro Aoki Gr. Dropped by 0.8BJPY.
(Architecture -0.6BJPY, Civil engineering +0.0BJPY, others -0.2BJPY).

Takamatsu Construction Group

M’s

20.4
18.6
0.05

20.5 △0.1%（20.5）

34.2 △26.4%（46.5）
33.6 ＋4.5%（32.2）

0.8 △19.6%（1.1）

0.2 △78.6%（1.0）

41.9
23.4
0.8（28.8）（27.1） （1.7）＋45.3% △13.5% △51.1%

Real Estate※Order（BJPY）※Revenue（BJPY）※Op. Income（BJPY）

0.7
26.7
21.6（37.2）（22.2） （0.7）△41.9% ＋20.3% +2.6%

Architecture

4.2
8.3
△0.02

Asunaro Aoki Construction

Mirai
Construction

Aoki
MarineToko
GeotechAsunaroRoad

33.3 +46.4%（22.7）

Niigata
Mirai

ShimadaGumi）

MibuCorporation（NakamuraShajiKongoGumi）

JP HomeTakamatsu EstateTokyo（SuminoeKogei

Takamatsu
Techno Service(Tokyo)

Takamatsu Estate
Osaka

Orders
18/6(17/6)
Revenue
18/6(17/6)
Op.Income18/6(17/6)

Takamatsu
Techno Service(Osaka)

Takamatsu
CorpU TS CA G

26.5
14.8
0.7

6.2
4.9
0.2

Civil Engineering

Asunaro Aoki Group

Takamatsu Group

Orders Revenue Op.Income
18/6
18/6
18/6
(17/6)(17/6)(17/6)

4.0
4.0
0.1（3.2） （3.2） （0.1）＋23.3%＋23.3% △1.7%
67.5 △2.5%（69.3）
54.1 ＋3.1%（52.5）
0.8 △55.0%（1.9）

Unit: Billion yen. The sum of Op.Income of each segments doesn’t match with the total due to admin costs.

©2018 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

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By-Group Orders, Revenue and Operating Income (Consolidated)
1. Orders decreased by 2.5% to 67.5BJPY. Takamatsu Gr. Remained strong and grew significantly.
Asunaro Aoki Gr.’s civil engineering dropped significantly.
2. Revenue increased 3.1% to 54.1BJPY. Takamatsu Gr. Stayed flat vs last year, while Asunaro Aoki Gr. Grew to 33.6BJPY
due to growth of civil engineering exceeding decrease of architecture.
3. Operating income decreased by 55.0% to 0.8BJPY. Takamatsu Gr. decreased by 0.24BJPY, while Asunaro Aoki decreased
Op.Income %by 0.84BJPY.
3.8%
80
80

Orders / Revenue（BJPY）

70
70

Orders

60
60

67.5

69.3

Takamatsu
Gr.

22.7

84% Op.Income（BJPY）

3% 7
1.7%

Revenue

52.5

54.1
33.3

5050

20.5

4040Asunaro

1%520.5

Aoki Gr.

3030

2020

46.5

1010001.9

1.1
1.0Q1, 2018/Mar FYActual43Op.Income

32.2

2% 634.2

33.6
0.8
0.8
0.2
Q1, 2019/Mar FY210ActualUnit : BJPY. Op.Income #s inside bars don’t match with the total due to admin (TCG unconsolidated)costs.

©2018 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

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Explanation of Shortfall of Operating Income vs. Last Year (Consolidated)
1. Out of decrease of operating income from 1.99BJPY (last Q1) to 0.89BJPY (current Q1), -0.18BJPY is due to 2.7% decrease of GP, despite revenue
growth of 3.1%.
2. Takamatsu Group’s gross profit grew by 0.38BJPY vs last year.
Although Takamatsu Corp’s gross profit % variance grew, its overall GP decreased slightly due to decrease of revenue.
3. Asunaro Aoki Group’s gross profit fell by -0.56BJPY, within which Asunaro Aoki (non-consolidated) accounted for -0.61BJPY,
due to backrush of last year’s completion of profitable architectures.
4. The second (and the biggest) reason for the shortfall was increase of SG&A.
→ Out of TK Group’s SG&A increase of 0.60BJPY, (1) 0.32BJPY is due to Mibu Corporation, our new member of the Group through M&A.
(2) 0.25BJPY is due to increase of SG&A of Takamatsu Corp., out of which 0.24BJPY is personnel expense.
→ Out of AA Gr.’s SG&A increase of 0.28BJPY, 0.21BJPY is due to increase of Asunaro Aoki (non-consolidated), of which 0.19BJPY is personnel.

24

Unit : Billion JPY

0.12△220.41

20

△0.09

0.06

16TK

TK

TKG

AA

14(Nonconsol.)(Nonconsol.)

12variance

GP(Nonconsol.) variance ofotherGP %companiesvariance

△0.49

0.05

18Rev.

+0.38

1061.99

Last Q1
OperatingIncomeAA AAG

0.60△(NonGPconsol.) variance ofotherGP %variance companies

Rev.
variance△Takamatsu Group(=TKG)

80.00

0.56

Asunaro Aoki Group(=AAG)△0.18
Gross Profit Variance±0.00
Others0.28△△0.04

TKAAGroupTCG

GroupOthers△0.92

SG&A Variance

0.89

Current Q1
OperatingIncome6©2018 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

By-Group・By-Quarter Revenue & Op.Income Outlook (Consolidated)
1. Although Q1 recorded lower profit figure vs last year, the Q1 profit figure was above plan.
2. Higher GP% figures are expected for Q2 and onwards, in addition to increased revenue.
Flat SG&A figures are estimated for Q2 and onwards in comparison to Q1.
3. After review of projects under progress, we will lower our Q2 Operating income forecast to 4.0BJPY due to delayedcompletion of Takamatsu Projects. However, we believe full year operating income of 15BJPY can be achieved.

FY 2018/3
Actual

100

Q3

Q2

Q1
FY2019/3 Actual(Brown=Plan)

FY2019/3Plan

FY 2018/3
Actual

Q41110FY 2018/3
Actual

FY2019/3Plan

FY 2018/3
ActualOrders / Revenue（BJPY）

Revenue
Revenue

40

Revenue

52.5

20

Asunaro 32.2
Aoki Gr.

054.1

49.9

20.5Takamatsu
Gr.

59.4

Op.
Income

20.9

20.5
19.9

1.9

33.6
1.1 30.0
1.0

Op.
Income0.8

0.60.80.1 0.2

22.7

3.1

1.4

1.4
40.0

2.2

Op.
Income

27.0

1.9

41.8

1.5

2.2

28.0

4.1

3.5

3.4

38.6

0.5

83

23.1

7.0

68.5

69.0

64.5

63.1

Revenue
41.0
Op.
Income

4.66
3.9

2.9
45.0

40.6
2.2

84

2.2
42.0

10
Op.Income（BJPY）

86.0

80
60

FY2019/3
Plan

3.4
2.0

20 7

Unit : BJPY. Op.Income #s inside bars don’t match with the total due to admin (TCG unconsolidated)costs.

©2018 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

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By-Group Orders, Revenue and Operating Income and Its Outlook(Consolidated)
1. Concerning revenue, although Takamatsu Gr. Was expecting 20% growth vs last year, Q1 actual was flat vs last year.
→ Previous Q1 had numbers of projects carried forward to Q1 for completion.
→ Knowing previous Q1 was advantaged, current Q1 plan was flat vs last year.
→ However, annual plan expects revenue growth after Q2.
2. Q1 revenue for Asunaro Aoki Gr. was also flat vs last year, however this is expected to continue throughout the year.
→ On the other hand, we expect GP% improvement of Asunaro Aoki Gr. after Q2.
3. We believe annual order of 280BJPY, revenue of 268BJPY and operating income of 15BJPY can be achieved through accelerated
high GP revenue of Takamatsu Gr. After Q2.
300
300
OrdersOrders / Revenue
Revenue（BJPY）
Op.Income %254.8

250 5%
250

3.8%

200 4%
200

106.4

245.1 5.6%

120.0

92.3

69.3
50501% 22.7

Takamatsu
Gr.

46.5

1.7%

Orders

15.0

52.5
20.532.2

Q1, 2018/Mar FY
Actual

67.5
1.9
1.1
1.0

33.3

148.6 153.4

Revenue

54.1
20.5
33.6

160.0 157.0

Op.
Income

0.8
34.2
0.8
0.2
Q1, 2019/Mar FY
Actual8.3

7.0

Op.Income（BJPY）

2520

111.0

13.6

100 2%
10000

268.0 5.6%

Op.
Income150 3%
150

AsunaroAoki Gr.

280.0

30

15
Takamatsu
Gr.

105
7.6

7.7

AsunaroAoki Gr.

0
Full Year, 2018/Mar FY
ActualFull Year, 2019/Mar FY
PlanUnit : BJPY. Op.Income #s inside bars don’t match with the total due to admin (TCG unconsolidated)costs.

©2018 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

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Occupancy Rate of Condominiums Built by Takamatsu Corp.
1. Occupancy rate is continuing to show above 95% for both Tokyo and Osaka+Nagoya for June 2018.
2. We believe rental condominium market is continuing to be tight for Tokyo and Osaka+Nagoya.
3. Although there are views that occupancy rate will drop for Tokyo, Osaka and Nagoya through aging, webelieve Takamatsu Corp. is remote from this view since Takamatsu Corp. concentrates in urban andnear-station locations of the three cities, where population is still increasing.
Osaka & Nagoya

100.0%
99.0%
98.0%
97.0%
96.0%
95.0%
94.0%
93.0%
92.0%
91.0%
90.0%

96.4%

95.7%

96.0%

95.1%

95.6%
FY Mar.2017
FY Mar.2018
FY Mar.2019

Jun.
Definition:

Tokyo

Sep.

Dec.

Mar.

100.0%
99.0%
98.0%
97.0%
96.0%
95.0%
94.0%
93.0%
92.0%
91.0%
90.0%

96.9%

95.8%
95.4%
95.1%

95.4%
FY Mar.2017
FY Mar.2018
FY Mar.2019

Jun.

Sep.

Dec.

Mar.

“Osaka and Nagoya” = Osaka, Kyoto and Hyogo Prefectures plus Nagoya City.
“Tokyo”= Tokyo, Kanagawa, Saitama and Chiba Prefectures“Occupancy Rate” = (Number of occupied condo apartments built by Takamatsu Corp and managed by Takamatsu Estate at the end ofeach quarter) divided by (Number of condo apartments built by Takamatsu Corp and managed by
Takamatsu Estate at the end of each quarter©2018 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

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