Review of OperationsReview of OperationsDomestic Construction Business12Domestic OperationsConstruction BusinessConstruction is the Company’s core business,accounting for over 80% of contract awards. It isdivided into the Building Construction, whichhandles construction of projects such as officebuildings, production plants and condominiumapartments, and Civil Engineering, which managesconstruction of projects such as dams, bridgesand tunnels.During the financial year ended March 31, <strong>2006</strong>,Kajima was awarded contracts totaling ¥1,123billion. Building construction accounted for81.0%, and civil engineering 19.0%. Design andbuild contracts accounted for 48.7% of the entireconstruction business.Tokyo BuildingAkasaka Yagenzaka NorthRedevelopment ProjectOmarugawa Hydraulic Power Plant, Upper DamNihonbashi Mitsui Tower
Building ConstructionMarket Conditions: Private-SectorInvestment Reaches New HeightsSpending on domestic construction projectsduring the financial year ended March31, <strong>2006</strong> is estimated at ¥30.8 trillion, andwhile investment in public constructionprojects continues to decline, privatesectorinvestment in construction continuesto rise, and is estimated to have againexceeded the previous year’s level. Anincreasing number of people returning tocentral cities is driving strong demand forcondominiums, and demand is considerablefor high-rise office buildings as part ofurban redevelopment projects. Privatesectorinvestment is expected to continueto grow, and we anticipate demand forproduction and commercial facilities.Performance: Integrated ApproachHelping to Make InroadsDomestic building construction contractsfor the financial year ended March 31,<strong>2006</strong> totaled ¥910 billion, of which designand construction accounted for 56.8%.Kajima offers an integrated approach todesign and build, incorporating expertisegained through numerous constructionprojects to create high-quality buildings. Byinvolving itself in projects during the planningand design stage, the Company candraw on its experience and technology topropose constructive suggestions regardingthe most appropriate constructionmethods, or ways to shorten the constructionperiod, an aspect of its business thathas won high praise from clients. Kajima’sdesign and engineering capabilities havebeen <strong>full</strong>y utilized for such projects aslarge-scale housing complexes, productionplants for flat panel displays and otherelectronic devices, and large-scale retailcomplexes, lowering costs and shorteningconstruction periods. This approach alsohelps to strengthen our price competitivenessand increase earnings.CANON INC. YAKO OFFICEMARUITO Osaka Business Park(OBP)Fullcast Stadium MiyagiPhase 2 ConstructionStrategies for GrowthThe Japanese economy remains strong,with capital investment expanding in a widerange of industries. At the same time, however,individual client needs are becomingmore sophisticated and diversified, and thecompetitive environment for contracts ischanging. Acknowledging this situation,Kajima will work concertedly to consistentlyrecognize these needs, utilize its uniquetechnological capabilities to provide thebest value to clients, and continue to boostits share of building construction contracts.We will focus particularly on proposals forlarge-scale redevelopment projects withexceptional business potential, offeringbuildings with high levels of quality andadded value, utilizing such leading-edgetechnology as environmentally friendlydesigns and sophisticated IT security systems.We will also utilize our dedicatedproject teams with specialized skills toobtain more contracts in a range of fields,including for medical-care facilities, hightechproduction facilities for electronicdevices and other sophisticated devices,logistics centers and commercial facilities.While expanding our business, we will alsocontinue with efforts to enhance constructioncapabilities, as well as raise earningcapacity by establishing a low-cost structure,and making further increases in productivity.In addition, Kajima is movingahead with efforts to diversify its sources ofrevenue in such fields as private financeinitiatives (PFI), engineering, renovation andenvironment-related business.Review of OperationsDomestic Construction Business13
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