Fiscal Year 2006

Management Policies
Strategic Overview
To become “Reliability No.1” Project Company
To become Excellent Company able to“Sustain Earnings Growth”
Nobuo SekiPresident and Chief Executive Officer
May 18, 2005

Contents
1.

DSP 2008 Program on Right Track

2.

Market Outlook

3.

Strategic Focus on Transforming Chiyoda
into “Reliability No. 1” Company also
Underpinned by Strong Earnings Growth4.

Summary

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１

DSP 2008 Program on Right Track

As a company with growing earnings,
will focus on increasing corporate value through self-help.
BusinessInnovation・ Plant
Lifecycle
Engineering(PLE)・ Sales oftechnology¾¾

Clients“Reliability No.1” Project Company
Excellent Company able to“Sustain Earnings Growth”

Build long-term
partnership with clients
based on superior technologies.

Finance

Establish a sound financial
position able to support
the creation of nextgeneration businesses.

▪ Drive forward innovation that“targets change and takes on thechallenge of bringing about change.”▪ Continuous enhancement ofcompetitiveness and improvement ofwork processes

Management ・Cold Eye Review
Innovation ・ BSC integrated
management system

Execution

Further upgrade project executionskills and Smart EPC. (with i-PLANT21®)

HR

Create an energetic
organization and refine
employee skills.

・ Cutting-edge technology capable of Technology
creating ultra large-scale plants
Innovation* BSC: Balanced Score Card

・ Group’s collective strengths
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２

Market Outlook(Equivalent to 1 million ton oil)

Booming Market Underpinned
by Growing Energy Demand

Chiyoda’sMarket Outlook

World Primary Energy Demand

Oil: Domestic

Source: IEA (International Energy Agency)

Rebound in investment
Higher added value
Chemical refinery integration
Plant Lifecycle Engineering
Japanese oil major
Oil

Natural Gas: Overseas
Natural gas

Coal

Global LNG boom
Large gas and chemical projects
using associated gas
New clean energy: Growing GTL
and other new energy markets

Other renewables

Coal: Overseas
Nuclear power
Water

Growing demand for coal andstricter environmental regulations
Growing demand for fluegas desulfurization
Business model reformÆ CT-I21 license business

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３Strategic Focus on Transforming Chiyoda into
“Reliability No. 1” Company also Underpinnedby Strong Earnings Growth Key Performance Factors to Win Recognition as“Reliability No. 1” Company(1) Operating structure and human resources:+ Excellent technology and project execution capabilities (SmartEPC)+ Risk management capability (Cold Eye Review, Project Audit)+ Professional manpower (PKP training system)+ Integrated project engineering system I-Plant21®, including sophisticatedIT technology+ Operation management system/Process approach (BSC integratedmanagement of progress)(2) Continuing implementation of additional initiatives:+ Assure superior reliability by leveraging existing systems and continuing
progress checks!!
+ Bolster Technical Cold Eye Review, Project Management Review!!
+ Review/cooperate information sharing with customers
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３Strategic Focus on Transforming Chiyoda into
“Reliability No. 1” Company also Underpinnedby Strong Earnings Growth Key Performance Factors for Earnings Growth(1) Raise gross profit on projects completed above grossprofit on new contracts through self-help
Do not make easy decisions or be compromised easily. Look deeper
for more convincing answers.

(2) Do not overstretch. Accomplish the task on hand thebest you can.

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S1

Business Expansion Driven by
Technological Competitive Advantage
zEstablish strong presence in large-scale plant market leveraging
experience, track record and technological prowess（Lager, Faster, Safer）
LNG Plants under ConstructionSnØhvit LNG (MelkØya Island) - Norway

Sakhalin II – Russia

4.5 MMTPA x 1
2006 - 2007

4.8 MMTPA x 2
2007 / 2008

As of April 2005

Chiyoda total capacity 37.9=
Worldwide total capacity 77.6

ELNG T 1/2 - Egypt
3.6 MMTPA x 2
2007+

49%

Qalhat LNG - Oman
3.3 MMTPA x 1
2005

NLNG (Bonny Isl.) T4/5 Nigeria
4.0 MMTPA x 2
2005

RasGas II Tr-4 - Qatar
4.7 MMTPA x 1
2005

Ras Laffan

Darwin LNG - Australia Atlantic LNG T4 – T&T

RasGas II Tr-5 Qatar

3.0 MMTPA x 1
2006

4.7 MMTPA x 1
2007

Qatargas II Tr-4/5 Qatar

Das Is.

QATAR

5.2 MMTPA x 1
2006

NWS T5 - Australia
4.2 MMTPA x 1
2008

7.8 MMTPA x 2
2007 / 2008

Papua (Tangguh) Indonesia
3.8 MMTPA x 2
2007

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S1

Business Expansion Driven by Technological Competitive Advantage
zIncreasing Large-Scale Investment in Qatar★ indicate contracts received
RasGas, RasGasⅡ

QATARGAS, QATARGAS 2Qatar★ Train 1★ Train 2★ Train 3★ Train1/2/3★ Train 4★ Train 5

Ras Laffan
EPC（1997）
1997）
EPC（1997）
1997）
EPC（1998）
1998）
Debottlenecking（2005）
2005）
EPC（EPC（2007）2007） 780
EPC（EPC（2009）2009） 780

LNG
LNG26.3
26.3million
milliontons
tons
QATARGAS ３
Train 6

Qatar announced
LNG export plan:
77 million tons / year by2011（2009）
2009） 780 ★FEED★ Train 1 FEED660★ Train 2 FEED
★ Train 3 EPC（2003) 470★ Train 4 EPC（2005）2005） 470
★ Train 5 EPC（2007）2007） 470
LNG
LNG20.7
20.7million
milliontons
tons
RasGasⅢ
Train 6/7 ★FEED （2008）2008） 780×780×2

LNG
LNG15.6
15.6million
milliontons
tons(planning)(planning)★AlAl-Khaleej Gas Development Project EPC (2006)

LNG
LNG7.8
7.8million
milliontons
tons（（planning）
planning）

GTL plants

QATARGAS ４★FEED
LNG7.8million
LNG7.8 milliontons
tons（（planning）
planning）

Train7（2010）2010） 780

Qatar Petroleum★ Common Cooling Water Project EP (2004)

Independent Water and Power Plant
Gas Chemical Plants (Ethylene, etc.)

Expansion of Common Cooling Water System
Export through pipelines

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8Launching World's Largest LNG ProjectDecember 15, 2004

Contract
amount:about 400
billion yen

QUATARGAS (II) Project EPC Contract-signing Ceremony
LNG plant in Ras Laffan, Qatar / Capacity: 7.8 million ton x 2 = 15.6 million ton per annum (world’s largest)
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9S3

Strengthen Financial Position to Invest inCreation of Next-generation Businesses

z TargetDouble
DoubleStep-Up
Step-Up2008
2008aims
aimstotoachieve
achievesustained
sustainedsatisfaction
satisfactionin
inaabalanced
balancedmannermanneramong
amongthree
threestakeholder
stakeholdergroups:
groups:customers/suppliers,customers/suppliers,shareholders
shareholdersand
andemployees.
employees.
Customers/Suppliers
Customers/Suppliers

Improve
Improve stability
stability andand sustainability
sustainability-->--> Raise
Raise equity
equity ratio
ratio toto 30%
30% oror moremoreSocietySociety

Environment
Environment

ChiyodaChiyoda GroupGroup

Shareholders
Shareholders
Increase
Increase thethe dividenddividend andand corporate
corporate valuevalue-->--> Raise
Raise thethe dividend
dividend perper share
sharetoor more
moreto 10
10 yenyen orEconomy
EconomyEmployees
Employees
Recruit
Recruit talented
talented people
peopleandboost
motivation
and boost motivation-->
Improve--> Improve salaries
salaries andand other
other benefits
benefits(Introduced a performance-linked bonus system)
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Strengthen Financial Position to Invest in Creation of Next-generation Businesses
zCreate and Nurture an Earnings Growth Business Model
Effectively use technology resources and further bolster
earnings by licensing：: Coal thermal power;
power generation ratio: Clients and regions

OECDOECDEurope
Europe
190GW
190GW
30%
30%

America
America/ /Canada
Canada
330GW
330GW
35%
35%
Black & Veatch
Corporation

Dayton Power &Light ：600MW x 5 = 3.0GW(Mar. 2005)

Southern Company
Service, Inc.

China
China
200GW
200GW
65%
65%
Japan
Japan
35GW
35GW
15%
15%

BWE
Burmeister & Wain Energy/
Salvatore Trifone & Figli

EbaraCorporation

ChiyodaGeorgia Power :750MW x 2 + 940MW x 2= 3.4GW (Jan. 2005)

Russia and other regions: 280GW

Worldwide coalWorldwide coal
thermal power
thermal power
1,050GW
1,050GW
30%
30%

Korea
Korea
15GW
15GW
25%
25%

CT-121 for Kobe Power Plant
Our proprietary
Our proprietary
Wet Limestone
Wet Limestone
Flue Gas
Flue Gas
Desulfurization
Desulfurization
process wasprocess wasapplied to more
applied to morethan 50 plants
than 50 plants
worldwide.
worldwide.
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11

Promote SmartEPC andEnhance Project Execution

S2

Establish Commissioning Department
Assure smooth delivery to the customer aftercommissioning, a step that precedes performancechecks in the final stages of the project, by the Group’s
accumulated technology and know-how.

Strengthen and continue advanced IT
technology: Strengthen procurement IT andconstruction IT
Stabilize earnings by eliminating uncertainties at theproject execution stage.

Strengthen Integrated Use of
Global Engineering Satellites (GESs)
Increase staffing and strengthen functions.
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12

S2

Promote SmartEPC andEnhance Project Execution
Global Operation
4,800

5,100

5,300

6000

5000GESEnhancing
Global Engineering
Satellites(GES)1020

920

770
4000

Group
companies
2000

Workforce

2000

2000

2180

2280

Permanent
employees

Permanent
employees

１,１８０

１,２３０

2005年度初

年度初
Beginning of
FY2006 <forecast>

3000

2000

Chiyoda2030

1000

Permanent
employees

１,１３０02004年度初

Beginning of
FY2004

Beginning of
FY20052006

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S4






Create Energetic Organization andRefine Employees Skills
Introduced a performance-linked bonus system/ Reformed thepersonnel management system
Continue to employ professional staff
Strengthened Project Key Personnel (PKP) training
Established Research Institute of Technology Innovation &Strategy (RITIS)¾Focus on developing project engineering and advanced processtechnologies¾Technical Cold Eye Review¾Monitor technology base across the company and projects¾Use Lessons Learned to create new knowledge

Maintaining and improving technological capability to Become
the “Reliability No. 1” Project Company
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４Summary Our vision is to gain recognition as the “ReliabilityNo.1” Project Company in the energy and chemicals
sectors and to achieve sustainable growth as anexcellent organization that can consistently increase
earnings by training professionals, an unending
theme, in addition to implementing priority policies.
 At the same time, the Group places priority on

fulfilling its corporate social responsibility (CSR)
through respectful and dynamic corporate activities
in a dignified manner.

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Please address inquiries to: Takuhiro Murata, IR Manager, Corporate Communications OfficeTel: 045-506-7538 Fax: 045-506-7085 Cell: 090-3348-3484
e-Mail: tamurata@ykh.chiyoda.co.jp URL： http://www.chiyoda-corp.com/Forward-looking Statements
The forecasts and plans in this presentation are based on information available to management on May
18, 2005, the date these materials were prepared. Actual results may differ significantly from these
forecasts for a number of factors, including but not limited to changes in economic conditions andoperating environment in Japan and overseas.

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