Chiyoda Corporation

Telephone Conference Transcript
Financial Results for the 3rd Quarter of FY2017(Announced on Feb 9, 2018)

My name is Hirotsugu Hayashi, and I am the CFO of Chiyoda
Corporation.
Thank you very much for your continued support for us. I
appreciate your attendance at today’s Telephone Conference for the3Q Financial Results presentation.
First, I would like to explain the 3Q Financial Results and forecasts
for the remainder of this fiscal year. I will start with the three mostimportant points of this 3rd quarter result.
Please turn to page #2, “3rd Quarter Highlights”.
Firstly, I would like to highlight that the revenue progressedsmoothly in line with the expectation. We achieved 385.9 billion
yen of revenue as of the 3rd quarter, approximately 77% of the fullyear forecast.
Second, “profit attributable to owners of parent” reached 5.2 billion
yen.
Owing to progress in major ongoing projects in 3rd quarter andreduction of SG&A costs, compared to the 2nd quarter, our operating
income increased 4.3 billion yen, ordinary income increased 4
billion yen and profit attributable to owners of parents reached 5.2
billion yen.
The third point I would like to highlight is that “the full year forecast,including 5 billion yen of the profit, as announced on November 10,
2017 remains unchanged.
We are working hard at smoothly executing ongoing projects andaim to achieve the forecasted profit.
1Please take a look at page #4.
New orders for the first nine months of the fiscal year reached 209.1
billion yen approximately 60% of the full year forecast. Of this 209.1
billion yen, 95.9 billion yen is from overseas while 113.2 billion yen
comes from domestic activities. Notably, new orders in domestic
reached 113.2 billion yen, 87% of the full year forecast of 130 billion
yen.
Looking at the breakdown by Business Field, we can highlight that;
New orders from “Environment, New Energy, Infrastructure”
reached 67.9 billion yen, an increase of about 37% YoY was booked,
accounting for more than 30% of the total New Orders for the 3rdquarter.
In addition, including "Pharmaceuticals, Biochemistry and General
Chemistry" with “Environment, New Energy, Infrastructure”, bothcategories together account for almost half of new orders, under theleadership of the “Global Environmental Engineering Division”, a
newly created unit formed under the medium-term management
plan.
Including the above reasons, and as we expect stable domesticorders especially from “Global Environment Engineering Division”,
mid-to-small size projects of overseas subsidiaries and changeorders of the on-going projects, we maintain our New Order targetof 350 billion yen for the full year forecast.
Although the backlog is gradually decreasing, falling to 695 billion
yen, we expect that FID of new large-scale LNG projects will be madein the years ahead. Large projects include those we have
implemented FEED, such as Mozambique Area 1, Golden Pass (U.S),
and Sakhalin 2 · Train 3 (Russia).
Furthermore, to satisfy Qatar's increased production plan, we
expect that FEED will begin in the next fiscal year.

2Please turn to page #6, “income-related items”.
First of all, the revenue in the 3Q brought the year-to-date total to385.9 billion yen.
As shown on page #7, breakdown “by field”, revenues in “Refinery,Petrochemical, Metal” decreased as refinery projects in Vietnam andQatar were completed last fiscal year. On the other hand,"Environment, New Energy, Infrastructure "and "Pharmaceuticals /Biochemistry / Chemical" fields are showing steady growth.
With a decrease of 900 million JPY YoY, SG&A expenses came down
to 15.1 billion yen, as a result of “Structural Reform” measurements.
As a result, the operating loss reached 8.8 billion yen.
In addition, as we accounted for extraordinary income of 12.1
billion yen due to the reversal of the allowance for losses relating to“EMAS Chiyoda Subsea”, and a federal corporation tax refund tothe U.S. subsidiary in the 2nd quarter, extraordinary income in the3rd quarter reached 12.9 billion while corporate tax became a 700
million refund, and the profit attributable to owners of parents
increased to 5.2 billion JPY.
The “cash and deposits” position decreased by 36.1 billion yen,mainly due to the decrease in cash and cash equivalents at a U.S.
subsidiary, the main contractor for U.S. LNG project where costs
increased.
“Provision for loss on construction contracts” increased by 1.7
billion yen compared to the end of last FY; this was primarily booked
for an ongoing small to medium size overseas project. For yourreference, if comparing it with the 2nd quarter, increase of thisprovision is 0.9 billion yen.

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Please take a look at the last page #9, “Forecast Breakdown”.
Forecast figures remains unchanged from the revised “Full-Year
Forecasts “announced at the 2nd Quarter, in November 2017.
Revenue to reach 500 billion, Operating Income (9.5) billion,
Ordinary Income (8.0) billion, and Profit attributable to owners ofparent expected to reach to 5.0 billion JPY.
Moving forward, we continue to carry out each project with the fullintention of achieving the full year forecasts.
The earnings forecast for next fiscal year (ending March 2019) will
be announced at the full years result announcement of the current
FY results.
This concludes the explanation of the third-quarter results and fullyear forecasts.
Thank you very much.
--- End ---Any projections included in these materials are based solely on information available atthe time this presentation was prepared. It is possible that actual results may varysignificantly from the projections due to a number of risk factors such as economicconditions. The results projected here should not be construed in any way as being
guaranteed by the Company. Investor are recommended not to depend solely on theseprojections for making investment decisions.

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