Elevating the Shimizu Brand for Long-Term Growth and Value Creation
President and Representative Director
Our core principles, rooted in our founding spirit and the principles of The Analects and the Abacus, and the Shimizu brand we have accumulated over our long history, form the foundation of the Group’s sustained competitive advantage over our peers. Guided by these immutable values passed down over 220 years, we aim to sustain company growth and increase corporate value over the long term through disciplined efforts to improve capital efficiency, strengthen corporate governance, and pursue growth-oriented investments.
Our Transformation to Date and Commitment to Execution
Since becoming President in April 2025, I have held fast to my personal motto, “calm in adversity and composed in success.” When challenges arise, assess the situation calmly. When things go well, remain composed and avoid becoming complacent. I believe one must hold fast to this mindset when executing a company’s business, as it is crucial to steering the company through a turbulent business environment. The Shimizu Group has emerged from a period of adversity and is now turning its financial performance around. At such a juncture, we must take an objective look at the business environment, anticipate societal changes, and identify opportunities for creating value. We will accelerate diversifying our business and our global expansion, but must also respond flexibly to industry-wide challenges such as a diminishing labor pool, ageing population, rising labor, material and energy costs, as well as the rapid adoption of digital technology in construction (DX). We will address these challenges and advance into our next stage of growth. I am pleased to say that our results in FY2025 marked a new record, with 2,057.8 billion yen in net sales (up 5.8% year on year), 118.6 billion yen in operating income (up 67.1% year on year), and 126.6 billion yen in net income attributable to shareholders of the corporation (up 91.8% year on year). The recent turnaround in results is the culmination of all officers and employees across the Shimizu Group working as one.
In achieving sustained growth, we must firmly establish this Groupwide momentum toward improving business performance as our true strength, rather than a temporary phenomenon. To that end, I will continue to visit as many sites as possible; by listening directly to our employees and communicating my own thoughts through a variety of opportunities and channels, I plan to drive company-wide reforms in both our business practices and mindsets.
At the core of our business foundation are our talent and organizational capabilities. To strengthen both, management has launched a new personnel system that emphasizes roles and responsibilities. This system is designed to foster an engaging workplace culture, encourage healthy competition, support learning and professional growth, and boost our organizational dynamism and productivity. We also implemented a stock grant of transfer-restricted shares to employees as an incentive towards a greater interest in our financial performance and stock price, and to push them in achieving sustained growth for the company. These two initiatives will take time to bear fruit, but I will drive the necessary reforms, unbound by precedent, through fresh and adaptable thinking to create an engaging workplace.
Realizing the Mid-Term Business Plan and Long-Term Vision
Our long-term vision, SHIMZ VISION 2030, envisions us to become a“Smart Innovation Company.” This commitment reflects our desire to continually grow by keeping our company relevant to clients and society at large no matter how times change. It also represents our determination to pool expertise across business lines to create new sources of revenue, while continuing to draw upon the capabilities of our core business of construction. The value that the Shimizu Group will provide as a Smart Innovation Company, is the realization of a resilient society, where everyone can feel safe and secure, an inclusive society, where everyone can live in comfort and health, and a sustainable society, where future generations inherit a well-cared for environment. To that end, we are transforming ourselves, embracing challenges, and co-creating with a diverse range of partners to deliver value that anticipates the future.
If our organization is to continue delivering diverse value, we must be sustainable ourselves. We must maintain a disciplined approach to business management, prioritizing future growth and sustainability rather than only pursuing short-term profits.
The details of how we will execute the long-term vision are set out in the current the Mid-Term Business Plan〈 2024–2026〉, which also serves as a strategic milestone. The plan identifies creating a stronger business foundation as the number one priority. By boosting our talent and organizational capabilities and strengthening cross-functional collaboration, we will further evolve our sustainability management. In this increasingly volatile and uncertain business environment, we can only sustain growth if we continuously improve our business foundation and earning potential. With FY2026 being the third and final year of the plan, my focus this year will be not only on achieving our annual performance goals but also on accomplishing the tasks set out in the plan with the “Choukensetsu”mindset, so we can prepare the ground for the next medium-term business plan.
In 2030 and beyond, Japan’s construction market will be experiencing labor shortages - a legacy of the country’s dwindling population - along with a shift in demand. These circumstances will prompt a gradual change for industry paradigms. The market will shift from its traditional scrap-and-build model to a more cyclical model focused on remodeling and renovating existing buildings. To navigate this turning point, we will extend our focus beyond construction services and leverage digital technology and our global network to deliver value. Our next long-term vision will set out in greater detail how we will address society’s issues and what future we will help create. To help facilitate realizing such a vision, we will spend the years leading up to 2030 on transforming our earnings structure and establishing a solid foothold for further growth.
Going back to Our Origins and the “Shimizu Brand”
Since assuming office, I have repeatedly emphasized the importance of going back to our origins. By “origins,” I mean our founding spirit and corporate credo, The Analects and the Abacus. These comprise the foundation for our company’s heritage and culture, and must be preserved into the future. While these origins cannot be fully conveyed in just a few words, I offer the following anecdote.
In 1876, the Great Powers had pressured the Tokugawa shogunate - then in its final years, known as the Bakumatsu - to provide “accommodation suitable to Westerners.” In response, they decided to build a hotel in Tsukiji catering exclusively to foreigners. One man, as soon as he heard the news, put himself forward for the job. That man was Kisuke Shimizu II, heir to Shimizu’s founder. The shogunate, financially strapped, devised a scheme that was a precursor of private finance initiatives: the shogunate would provide the land for free, and in return, construction and operation of the facility would be private ventures. Kisuke Shimizu II took on the construction work along with the task of procuring finance and running the hotel. This was an entirely new experience for Kisuke Shimizu II, yet he remained undaunted and saw the task through to the end. This admirable feat illustrates Kisuke Shimizu II’s enterprising spirit, a spirit that has endured in Shimizu through the centuries.
At every available opportunity, I remind our officers and employees about such anecdotes and the importance of going back to Shimizu’s origins. Employees increasingly identify with what our company aspires toward and are gaining a renewed appreciation of the value in the work they do. The other day, I attended a ceremony to mark the completion of a project in Shizuoka, delivered for a longstanding client. The client offered warm words, saying that Shimizu delivers above and beyond what was expected, not just for that particular project but in all past projects the client has ordered. By exercising sincere Monozukuri(craftsmanship), our people had created value that exceeded expectations, satisfying the client. This very spirit is the source of the Shimizu Group’s competitiveness. It is this spirit that makes the Shimizu brand. The Shimizu brand is the epitome of the trust that employees have built up over the years by their honest sweat and sincere Monozukuri. We will keep going back to these cherished origins, and further hone the Shimizu brand, both in terms of technological excellence and innovative proposals, so that client will always say that Shimizu is the one to trust.
（The construction site for a research facility in Tokyo）
Commitment to Capital Efficiency and Corporate Governance
We are committed to giving all stakeholders a fair portion of the profits and other outcomes of our business operations. Doing so increases the Shimizu Group’s corporate value over the medium and long term and helps sustain its business growth. To that end, we will implement a series of actions to improve return on equity (ROE), with a medium- to long-term benchmark of 10% or higher. In our core business of construction, measures such as a stricter pre-order screening in accepting contracts with a greater weight to profitability, production management based on order tracking and control, and increased front-loading to enable more accurate construction planning, are beginning to improve earnings. We will also make greater inroads into promising markets, including high-tech facilities such as semiconductor fabrication plants and datacenters. Through these efforts, we aim to shift our business structure toward higher profitability.
We also view improving capital efficiency as an important ongoing business challenge. When it comes to investing in our business operations, the Board of Directors and other governing bodies discuss the capital costs of the investments with a view to balancing financial soundness with capital efficiency and thus optimizing our business portfolio. Likewise, we will proceed with investing for growth - in talent, productivity, research and development, and M&A - while maintaining capital discipline.
In 2026, two M&A transactions were officially approved by the executive team and the Board of Directors following extensive deliberation and vetting. The first, enacted in March, brought AOMI Construction Co., Ltd. into our Group. Primarily engaged in marine and land-based civil engineering and ground improvement, AOMI Construction boasts technological excellence and a formidable track record in each area. The second transaction welcomed American Engineering Corporation(Okinawa). The company specializes in construction for US military bases and in IT-related infrastructure projects such as datacenters for foreign-owned companies. These new unions were not short-term measures to increase the size of our organization. There was a clear strategic rationale to share expertise across organizational boundaries and create synergies that will increase the corporate value of the Shimizu Group and strengthen our prospects for sustained growth. We make rational, level-headed decisions as to how each acquisition contributes to our financial performance over the medium and long term, and whether it is consistent with the Shimizu DNA.
To ensure that we make the right investment decisions, we need an effective Board of Directors. To improve the quality of board discussions regarding the increasingly diverse and complex array of investment options, we are taking steps to make sure that directors are well briefed before the meeting and that they have ample opportunities to discuss the proposal. We have also introduced a stock compensation plan linked to medium-term performance. This plan encourages executives to help the company sustain its growth and improve its value over the medium and long term. The recipients are incentivized to improve corporate performance while sharing with shareholders the risk and return associated with stock price fluctuation. We will continue to strengthen corporate governance as part of our efforts to improve the quality of investment decisions and maintain effective, impartial oversight.
Message to Stakeholders
Our progress forward is guided by our conviction to realize the spirit embodied in our corporate slogan, “Today’s Work, Tomorrow’s Heritage.” Monozukuri is a joy rooted in human nature as well as a noble act towards building the future. We have a responsibility to communicate its appeal to the next generation and to society as a whole. This role is all the more important in this time of critical shortages in skilled workers. While improving working conditions, we will actively communicate how rewarding and meaningful a career in construction can be.We will also provide more opportunities for foreign talent and foster an inclusive workplace where a truly diverse team can excel. Through these efforts, we will lead the industry forward. While continuing to treasure our most precious assets - our long-cherished history, traditions, and trust - we will also adapt to the needs of the times, never resting on our laurels. We will walk forward in step with society and never stop challenging ourselves to forge a brighter, happier world for the future. I hope you will continue your support of the Shimizu Group’s journey of sustainable growth and increase in corporate value, as well as our future that lies beyond them.
