JGC Holdings Corporation

I'm Taguchi, General Manager in Charge of Finance and Investor Relations. I will present the outline of financial results. Please turn to page 3 for highlights. In the total engineering business, we strengthened project execution capabilities and overall profitability improved due to steady progress in large-scale EPC projects, both domestic and overseas. While certain projects continue to be challenging in the fourth quarter, Operating profit exceeded expectation, though the financial results reflected the potential risks of project cost increase arising from armed conflicts in the Middle East starting from February. In addition, the dollar-yen exchange rate at the end of the fiscal year settled in the 159-yen range, significantly weaker than our forecast of 150-yen, and higher non-operating income, including foreign exchange gains, contributed to increased net profit exceeding our forecast. Regarding the dividends, we had previously forecasted a minimum dividend of 40 yen, but based on the increase in net profit, we applied a 30% payout ratio under our shareholder return policy and plan to increase the dividend by 12 yen to 52 yen per share. We plan to revise our dividend policy from FY2026, and I will explain it at the end of the presentation. Please turn to page 4. I will explain the Middle East situation. First, let me start with the business impact. In the total engineering business, the Middle East accounted for 45% of the order backlog as of the end of March 2026, and multiple large-scale projects are under execution. Under close coordination between headquarters and construction sites, We are working with careful measures to ensure the safety of all stakeholders, while none of the construction sites has suffered the direct damages from the armed conflict. We observed some impact toward the end of the fourth quarter, including slowdown operations due to temporary vacations and site access restrictions. In addition, the continued personnel movement and logistics constraints are expected to remain as challenges in projects. Consequently, various costs which were not estimated at the planning stage may arise and will ensure appropriate cost-sharing management with clients, while contractual treatment varies by project and may require negotiation in some cases. We think that we need to take a conservative view of these risks to some extent. In the functional material manufacturing business, uncertainty has been increasing regarding the future procurement of certain raw materials at domestic manufacturing sites. Next, financial performance impact. On accounting, we estimate additional costs on a project-by-project basis related to safety measures, schedule delays, and restrictions on personnel movement and logistics. After considering contractor terms with clients, including the possibility that the company may bear a portion of these costs, we recorded these costs for risks conservatively. These estimates assume that tensions, including the closure of the Strait of Hormuz, will be eased in the first half of this year, and that there will be no material impediments to project execution. As a result, profit margins for FY 2025 declined by approximately 1 percentage point. Turning to FY 2026 forecast, In addition to this impact, we have factored in the decrease in net sales of approximately 60 billion yen, reflecting slower progress on certain projects in the Middle East. This decrease in net sales is expected to be recognized from FY2027 onwards. we have also incorporated a certain level of potential impact of insufficient procurement of raw materials in the functional materials manufacturing business. It is also based on the assumption of normalization in the first half of this year. Accordingly, if the closure of the Strait of Hormuz is prolonged or military conflict escalates, it is possible to suffer further impact through additional responses and schedule delays. Please turn to page 6 for consolidated income statement. Net sales were 745.2 billion yen down 112.8 billion yen year-on-year. Gross profit was 64.1 billion yen with profit ratio of 8.6%. It exceeded the forecast mainly driven by improved profitability in EPC project in Japan and overseas. Operating profit was 35.3 billion, ordinary profit was 58.1 billion, and profit attributable to owners or parent was 41.8 billion. As a result, return on equity reached 10.2%. Page 7 shows segment information. Net sales of the total engineering business was 679.5 billion yen, close to the full-year forecast revised in the third quarter following the review of the project progress. They decreased by 115.3 billion yen a year due to the postponement of new project awards. Its segment profit was 33.6 billion yen. Overall profitability improved supported by steady execution and risk reductions across multiple large-scale overseas projects. Accordingly, results exceeded the forecast despite reflecting the negative impact such as additional costs related to risks in the Middle East situation. In the functional materials manufacturing business, net sales were 56.9 billion yen and segment profit was 7.6 billion yen, which were almost in line with the forecast. Others and adjustments were also in line with the forecast. Page 8 shows outline of contracts in the total engineering business. New contracts in FY 2025 were 250.4 billion yen for overseas, 158.7 billion yen for domestic, and 409.2 billion yen in total. Domestic new contracts were steady, while overseas new contracts were weaker than the forecast due to the default of clients' investment decision on large-scale LNG project to the next fiscal year. Major new contracts in the fourth quarter included additional FLNG preliminary contract overseas as well as food-related factories in Japan.

Turning to slide 9, this shows the outstanding contracts for the total engineering business As of the end of March, outstanding contracts stood at 1,155,500,000 yen. The Middle East accounted for 45% of the total, with five of our major projects located in the region. Including adhesion projects, none of the projects currently underway in the Middle East have been suspended, and all the projects are progressing with appropriate safety measures in place. Of these, the two projects in the UAE and Saudi Arabia with outstanding contracts exceeding ¥100 billion are still in the early stages, primarily focused on engineering work. For these projects, Transportation of equipment and materials as well as construction activities are expected to ramp up going forward, and therefore the impact of the current Middle East situation has so far been limited. Our current budget assumptions are based on the premise that there will be no disruption to project execution during the first half of the year. However, prolonged closure of the state of homes and similar development remain risk factors. In addition, two projects with a backlog exceeding 50 billion yen and one project exceeding 30 billion yen are already in their final stages. Although materials and equipment have already been delivered, the outbreak of armed conflicts affected project progress between March and April, including our efforts to enhance safety measures at construction sites and to revisit execution frameworks. Nevertheless, work is currently continuing under structures tailored to conditions at each site, and even if the current situation persists, we believe the impact going forward will remain limited. Turning to slide 10, this shows our consolidated financial position and cash flows. Total assets increased by 54.6 billion yen from the beginning of the fiscal year to 838.7 billion yen. Net assets increased by 38.9 billion yen to 431.1 billion yen, and equity ratio was 51.2%. Our share of cash held by the joint ventures that is not recorded on the balance sheet increased by 16.2 billion yen from the beginning of the fiscal year to 109.8 billion yen. Open cash flow was a positive 79.8 billion yen, mainly due to an increase in advance payments received for overseas projects in the early stages. Investing cash flow was negative, 14.8 billion yen, primarily due to the acquisition of tangible fixed assets including business sites and manufacturing equipment for the functional materials manufacturing business. Cash flow from finance activities turned negative, 10.9 billion yen, mainly due to dividend payments. Turning to slide 12, this shows our earnings forecast. We expect new orders in the total engineering business to reach 1.74 trillion yen. Net sales is projected to decline 10% year-on-year to 670 billion yen. Gross profit is expected to increase 14% year-on-year to 73 billion yen, with the gross profit margin improving 2.3 percentage points year-on-year to 10.9%. We expect profitability in the total engineering business to improve due to factors including the resolution of underperforming projects. Operating profit is forecast to increase 13% year-on-year to 40 billion yen. Ordinary profit is projected to decline 20% year-on-year to 46 billion yen. Our assumptions are based on the stronger yen at 150 yen to the U.S. dollar and expect the non-operating foreign exchange gains recorded in the previous fiscal year to reverse into losses. Profit attributable to owners of the parent is projected to increase 10% year-on-year to 46 billion yen, reflecting accurately 20 billion yen in extraordinary gains from the sales of equity method affiliates. These forecasts are based on the assumption that tensions including the closure of the Strait of Homs will ease during the first half of this year and will no longer disrupt project execution. Turning to slide 13, this shows our segment outlook. In the total engineering business, we forecast net sales of 6.6 billion yen, signal profit being 41.4 billion yen, and the profit margin being 6.8%. We have factored in approximately 60 billion yen in net sales downside risk associated with the slower project progress resulting from the Middle East situation. Since the majority of the Middle East-related risks assumed this time were already reflected in FY2025 results, and because negative factors are expected to decline as underperforming projects are resolved, we expect profitability to recover. In the functional materials manufacturing business, we forecast net sales of 55.5 billion yen and second profit of 6.6 billion yen, representing declines in both revenue and profit. On a baseline basis, performance comparable to the previous fiscal year is achievable. However, we have factored in approximately ¥1 billion in revenue downside risk related to raw materials procurement disruptions stemming from the Middle East situation. Other businesses are expected to remain largely flat. Adjustment expenses are expected to increase by approximately ¥2 billion due to the high R&D investments and increased digital-related investment. Now slide 15. Finally, I would like to explain our efforts to enhance shareholder returns. In the new five-year medium-term business plan announced today, beginning in FY2026, we have established a new shareholder return policy. Previously, our dividend policy targeted a payout ratio of 30% with a minimum annual dividend of 40 yen per share. We have now changed this framework to one based on Dividend on Equity or DOE. Through this approach, we aim to provide stable dividends regardless of fluctuations in profits while also pursuing dividend growth in line with business growth. For FY2026, the first year of the new plan, we forecast an annual dividend of 52 yen per share based on a DOE of approximately 3%. We aim to raise DOE to 4% by the final year of the medium-term business plan for the fiscal year ending March 2031. Regarding the share buybacks, we will continue to consider them flexibly and appropriately based not only on earnings forecast and cash flow conditions, but also from the standpoint of capital efficiency. This concludes the overview of financial results. Thank you indeed.

This is Sato. I will now present the business overview for FY2026 and the summary of new medium-term business plan. Please turn to page 4. I will explain orders target of the total engineering business. We set FY2026 order target at ¥1.74 trillion with ¥1.63 trillion overseas and ¥140 billion domestic. Overseas major projects include Mozambique FLNG, Papua New Guinea LNG, which were postponed from FY2025 and LNG Canada Phase 2. While the overseas order of 1.6 trillion yen may seem large, as the major projects are ones where we can leverage our past EPC execution expertise, and we have been involved from the feed, the risk is limited. We have already secured internal resources. In Japan, In addition to SAS project for oil companies, we focus on EPC orders for pharmaceutical plants, food-related factories, and nuclear-related plants, while also steadily working on our base load maintenance business.

Please turn to page 5.

I will explain the current market environment of the total engineering business, which is related to orders mentioned earlier. Overseas, following 2025, demand for natural gas and energy remains solid, driven by energy security and a realistic transition to decarbonization. A large number of LNG projects across North America, Asia, and East Africa exist. While in sustainability area, projects exist at the study and planning stages, but many remain at the demonstration phase due to regulatory implementation and project economics. And the project where capital investment is realized is limited. In general industry sector, the investment plans for semiconductor-related facilities data centers are making steady progress in Southeast Asia. In Japan, the postponement trend of investment plans for sustainability projects, including SAS, continues. The government has set a target to replace 10% of aviation fuel in Japan with SAS by 2030. We expect that the framework for achieving this target will be clarified in this fiscal year, leading to the realization of EPC for SAF project. In the life science sector, food sector, and nuclear sector, plans and studies are progressing. Maintenance services also see a steady level of demand each year. While no major changes in the market environment are currently observed, we need to closely monitor impact should tensions in the Middle East persist over the long term. For EPC project currently ongoing, we will closely watch the potential impact from rising prices of materials and equipment, transportation costs, as well as procurement shortage and longer lead time. Regarding projects under active pursuit, including those in FY2026, the project covered in the previous slide will proceed as planned as of today. But we need to be watchful for potential delays in clients' final investment decisions depending on the changes in macro environment.

Please turn to page 7.

I explained the business environment and outlook of Frank Strong Materials manufacturing business. Results were, as Taguchi explained earlier. Regarding market environment, demand for catalysts, for petroleum refining catalysts overseas in particular, remains strong. In fine chemicals, The semiconductor and electronics markets are on the recovery track, and the demand remains strong for fine chemical products in general, particularly hard disk drives and silicazole. In fine ceramics, demand for semiconductor manufacturing equipment and electronic materials for generative AI and data center is increasing. While demand for high thermal conductivity silicon nitride substrate for EVs in Europe and the U.S. temporarily declined, it will partially recover in FY2026. We will closely monitor the situation and expand into Chinese market where demand remains strong. In functional materials manufacturing business, amid prolonged Middle East tensions, the risk of raw material shortage which will lead to procurement difficulty or longer lead time and price increase is also anticipated. We will implement countermeasures such as diversifying suppliers and purchasing alternative products. Next, I will explain the summary of the new medium-term business plan. At 3.30 p.m. today, we announced the JGC Group's new medium-term business plan, BSP 2030, which covers from FY2026 to FY2030. For further details, we will provide an explanation using the presentation materials for BSP 2030 at the investors' meeting scheduled on May 27, Wednesday. Today, I will briefly explain the basic concepts and overview behind the formulation of BSP 2030.

Please turn to page 9. First, I would like to share the thoughts and intentions I believe in creating our new medium-term business plan, BSP 2030. The business environment remains extremely uncertain, and most recently, the situation in the Middle East is having a significant impact on the global economy and the stable supply of energy. However, it is precisely during times of such change that we believe it is essential to stay close to our clients, anticipate challenges ahead of time, and work together to solve them. This mindset forms the foundation of BSP 2030, our new medium-term business plan. We are a corporate group possessing a broad range of technologies across diverse business domains. By connecting and integrating technologies and expertise both inside and outside the company, we have developed a strong ability to adapt and create new value amid changing circumstances. To achieve sustainable growth, we must leverage this strength and continue transforming our portfolio in line with our 24-day vision. Over the next five years, we are determined to build a solid foundation by taking on the challenge of establishing promising businesses that can succeed LNG as our next core growth driver while also strengthening our human capital. Please turn to page 10. As stated at the beginning of the executive summary on page 10, while reaffirming the strength I have just described, we have defined the vision we aspire to achieve by 2030 as a collaborative partner that connects technologies and tackles global challenges with anticipatory solutions. To realize this vision, VSP 2030 identifies three key strategic priorities. The first is continuously enhancing the competitiveness of the total engineering business. Here, the total engineering business should be understood to include not only EPC, but also upstream businesses such as FS and Feed, as well as downstream businesses such as 1M and plant modification services. As the core business of our group, the total engineering business will continue to serve as an extremely important earnings pillar. However, in order to achieve sustainable growth, we believe it is first and foremost critical to sincerely reflect on the lessons learned over the past five years and re-establish this business as a strong and stable source of earnings. In addition, to respond to changes surrounding the EPC supply chain environment, we will continue taking on the challenge of enhancing EPS execution methods through the utilization of digital technologies, modularization technologies, and other innovations. Furthermore, by flexibly adapting our approach in accordance with changes in the business environment, market maturity, and our computer positioning, we will identify promising business domains within the total engineering business and strategically calculate them into future earnings pillars. The second key strategy is accelerating growth in the functional materials manufacturing business. Through BSP2025, the functional materials manufacturing business has established itself as our second core pillar. Under BSP2030, we will further accelerate its growth by promoting the three priority initiatives shown here. Specifically, we will position the semiconductor-related market, which continues to enjoy strong market growth, as a key target area. By strengthening our development and marketing capabilities, we aim to generate high-margin proposal-based projects, while actively expanding into overseas markets. The third key strategy is expanding the solution-based business. By solutions-based business, we refer to scalable and versatile business models that can be provided to multiple clients. As mentioned earlier, in a highly uncertain business environment, identifying and anticipating client challenges through close engagement with clients will lead directly to the creation and expansion of business opportunities. As a wide range of new technologies continue to emerge, we will develop such solutions ourselves, including through alliances with technology partners, and deliver them by leveraging our group's client base. Through these efforts, we will pursue the investigation of our business model and the profit growth. As part of these initiatives, we are currently taking on the challenges of establishing a new business field known as biomanufacturing. Biomanufacturing aims to produce materials and products using underutilized resources such as CO2 and woody biomass as field stocks, and we are currently engaged in related research and development activities. At present, we are participating in a national project focused on developing microorganisms required for such manufacturing processes, as well as their cultivation and scale-up, while continuing our efforts toward medium- to long-term social implementations. This business represents an innovative initiative utilizing non-fossil resources as feedstocks at a time when society is increasingly demanding the realization of a circular economy and enhanced energy security. By proactively focusing on this field ahead of others, we aim to create future business opportunities that will support our long-term growth. These are our three key strategies, and alongside them, we will continue strengthening the management foundation that supports their execution. Finally, as the outcome of these initiatives under BSP 2030, we aim to achieve open profit of 60 billion yen, net profit of 50 billion yen, and ROE of 10% or higher by 2030. We will provide more detailed explanations at our investor briefing scheduled for May 27th. This concludes my presentation. Thank you indeed for your kind attention.