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MAEDA CORPORATION’s non-consolidated financial results for the fiscal year ended March 31, 2024 saw record highs in both gross profit and operating profit, considerably exceeding the earnings target for the entire fiscal year. We have been able to maintain our strong performance despite rising material and labor costs. Two factors contributed to the performance. One is the payoffs from our strategy of tighter ordering discipline, which we have been working on for more than a decade to avoid relying on cost competition in the construction business. And the other is our strategy of participating in projects from upstream points and working with project owners to formulate projects from the early stages. This is reflected in the fact that our provision for construction losses is by far the smallest in the industry.
We are confident that this results from our company-wide business and mindset reform efforts carried out with a healthy sense of urgency and grounded in a medium- to long-term perspective and strategic thinking.

In particular, contribution to profit growth in the civil engineering business through design changes with a very high degree of difficulty, improved construction efficiency, and shortened project durations in the building construction business, as well as increased profit margins driven by large-scale redevelopment projects and upstream initiatives that create added value in the building construction business, have supported the performance of this fiscal year.

For the de-construction business, more than 10 years have passed since we declared our “de-construction” policy, even before the establishment of INFRONEER. As a result of our long-standing strategic efforts to develop the business as a third revenue base along with civil engineering and building construction, we are now beginning to see tangible outcomes.
The pillars of the de-construction business are infrastructure operation and renewable energy business.
For the infrastructure operation business, we started the operations of "Miura Sewage Concession Co., Ltd." which is a pioneer of sewerage PPP, in April 2023, and received orders for the "Operation and Maintenance Management Project of the Japan National Stadium," "Toyohashi Multipurpose Indoor Facility and Toyohashi Park East Side Area Development and Operation Project," and "Toyama City General Gymnasium R Concession Project."

Also, for the regional business promotion to solve issues of local government infrastructure, in Saitama City, we started private sector proposals-type "Public-Private Partnership Modeling" operations, which are related to the infrastructure operations etc. promoted by the Ministry of Land, Infrastructure, Transport, and Tourism. We are studying a business model in the infrastructure where no collection of usage fees is required, developing the model for other local governments, and establishing approaches for evolving it into Availability Payment (AP).

Approximately three years have passed since INFRONEER was founded. For these three years, collaboration with Group companies has become closer, enabling the smooth implementation of sales, construction, technological development, information security, group finance, and other measures.

Establishing a cooperative framework for sales promotion across the entire INFRONEER Group has not only contributed to the increase in new orders received, but also led to expanding pipelines with local governments for Public-Private Partnership projects.

We are seeing an expansion in the range of proposals taking advantage of Group synergies, which have brought fruitful results, such as the successful bid placed in June 2024 for Toyohashi City’s Arena BT + a Concession Project, "Toyohashi Multipurpose Indoor Facility and Toyohashi Park East Side Area Development and Operation Project," for which we took part in the bid with MAEDA ROAD. Additionally, we are collaborating on initiatives to reduce CO₂ emissions by introducing the environmentally friendly asphalt mixture "LEAB." We worked together to swiftly and effectively engage in the disaster recovery activities following the Noto Peninsula Earthquake that occurred in January 2024. Furthermore, we are collaborating with Maeda Seisakusho on technological developments, including machinery specialized for tunnel renovation work.

The renewable energy business, another pillar of our “de-construction” business, is expected to generate synergies with Japan Wind Development that will further accelerate development. As development progresses, we will have the option of transferring projects with increased added value to the secondary market, producing a profit base for the “de-construction” business. Such value-added creation through capital recycling is a MAEDA CORPORATION’s strength that other companies in the industry lack.

The construction industry is required to further improve the working environment, because the industry is under increasing pressure as the 2024 issue—the strict enforcement of a legal cap on overtime hours—makes itself fully felt, sparking concerns about its impact on project durations, costs, and systems. To address the persistent risk of excessive workloads, supervisors and other responsible personnel have conducted real-time monitoring of working hours and have considered improvement measures for individual cases.
It is important not to allow construction sites to carry risk burdens all by themselves, and we are looking to create an open environment where information is shared promptly from construction sites to branch offices and the head office so that the entire company can work together to deal with the situation. We are also stepping up cooperation with members of our Zenyu-kai association of partner companies.

We believe that upgrading our supervisor capabilities in this context is the key to our human resource strategy. As we have advanced our reforms and efforts to develop young talent, supervisors have been required to have a higher level of knowledge and skills than ever before. We provide not only current supervisors, but also executive candidates and mid-level employees with opportunities to receive solid training in the knowledge, abilities, responsibilities, and judgment required of supervisors, thereby laying the groundwork for developing human resources as well as preventing harassment.

We recognize that addressing climate change is a significant challenge in the construction industry. It is essential for the industry to focus on the renewable energy business toward the achievement of society-wide carbon neutrality. MAEDA CORPORATION contributes to reducing CO₂ emissions throughout the building lifecycle by introducing non-fossil certificates across the company and proposing upstream design-phase strategies to address the substantial CO₂ emissions during the operational stage of buildings. Additionally, we are taking on challenges with energy-saving technologies, such as ZEB and ZEH-M*, and wooden construction.

The EXCHANGE building at MAEDA CORPORATION's innovation hub, ICI Lab, not only achieved ZEB, but also became the first in Japan to receive the Platinum certification, the highest rating under the international Assessment System for Built Environment Efficiency, "LEED V4 BD+C New Construction." Additionally, the building has won various environmental awards, showcasing MAEDA CORPORATION's energy-saving technologies.

This year is the final year of our medium-term management plan, "NEXT10 2nd Stage," and we have adopted a "balanced approach in both offense and defense" as the theme of the year. While advancing a "defiant attitude toward innovation” to implement efforts ahead both inside and outside of the industry (offense), we are also focusing on building an open and transparent organization. These efforts are part of our commitment to "building a sustainable framework" (defense) by addressing diverse issues and challenges across the company.
In particular, regarding the "defense" aspect, the long-standing issue of workforce shortages has become increasingly evident, coupled with the intensifying pressures on work sites as the "2024 issue" reaches its peak. This situation has posed a potential risk to profitability, quality control, and safety. We aim to address the challenges not by burdening a single business site with all the challenges but by leveraging the collective knowledge and expertise of the entire company.

MAEDA CORPORATION has been engaged in contract work since its foundation, and this policy on further deepening our core business remains unchanged. Making good use of the engineering capabilities we have honed through construction, as our backbone, we will accelerate efforts to promote de-construction to address societal challenges and meet the needs of the times.

More than 10 years have passed since we began to work on “de-construction”, and we are finally getting a sense that it is gaining traction within the company. In Public-Private Partnership projects within local governments, it is essential to propose and create new value at the upstream stages, grasping the challenges and future visions specific to each region. In order to encourage each branch office to take the initiative in promoting the implementation of the CSV mentioned above, several years ago, we established in-house organizations at our head office and branch offices dedicated to pursuing regional projects, and since then, we have strengthened public-private partnerships (PPP/PFI). The needs of local governments have risen since these organizations were founded, and we expect the market to grow in the years to come.

Currently, there are about 30 concession projects in Japan, and INFRONEER Group is participating in one-third of them. We are also working together with MAEDA CORPORATION’s Group companies, FBS and JM, on the comprehensive management of public facilities to identify the needs of a wide range of local governments and develop medium- to long-term projects, although this is a smaller-scale endeavor than concession projects.

I believe that Japanese companies should try to shift to business models that secure revenue through value-added proposals and distribute it to stakeholders rather than seek to expand market share by lowering prices. We are currently stepping up our sales activities in the construction business by entering the business from the upstream and making value-added proposals based on a “de-construction” mindset. We will strike a balance between construction and “de-construction” services as we fulfill our responsibility as the INFRONEER Group’s core company to contribute to the Group’s growth.

In anticipation of the accelerated growth in the NEXT10 3rd Stage starting in April next year, we will boldly take on challenges, maintaining an offensive and defensive attitude based on a "balanced approach in both offense and defense."