Power Projects & Infrastructure Division Strategies and Initiatives
Industry Environment and Fiscal 2008 Results
Division businesses, by virtue of existing in the utilities sector, experience exceptionally firm demand. Earnings stability, moreover, is largely assured through long-term power purchase agreements for the majority of projects. As such, we recognize that the recent global recession is likely to have only a limited impact on division performance. In fiscal 2008, ended March 31, 2009, fluctuations in crude oil prices and currency exchange rates have affected the profitability of existing projects. The recession’s impact is also starting to show on the finance front, where it is hindering financing arrangements for new projects and other tasks. Consequently, we will focus attention on addressing this point in the coming months.
Going forward, we will take fuller advantage than before of our many tools gained through years of experience, such as the rigorous selection of highly profitable projects and diverse financing sources prefaced on institutional finance. In this way, we will take assertive steps to enhance the competitiveness and maintain or improve the profitability of our projects, viewing today’s recession as a prime opportunity to be much more selective.
Key accomplishments in the IPP field in fiscal 2008 included the acquisition of Senoko Power Limited, the largest power generation company in Singapore, the acquisition of partial interest in Hsin Tao Power Corporation Gas-Fired Combined Cycle Power Plant in Taiwan, and the acquisition of major Australian comprehensive energy company Energy Infrastructure Investment Pty Limited (EII; formerly APA GasNet Australia Investment Limited (GAIL)). In the EPC field, Marubeni was awarded a contract for construction of a cogeneration power plant by Glow Energy Plc (“Glow”), one of the biggest independent power producers in Thailand. In addition, we won a contract from Qatar General Electricity & Water Corporation for constructing a pumping station and water mains for one of the Middle East’s largest wastewater treatment stations.
As a result, in fiscal 2008, segment gross trading profit totaled 50.1 billion yen, and segment net income amounted to 11.5 billion yen on a consolidated basis.
Initiatives in Fiscal 2009
In the overseas power plant EPC business, in addition to focusing on capturing orders from existing priority markets, we plan to aggressively develop our after services operations for power plant projects joined in the previous fiscal year to diversify and expand earnings sources.
In the overseas IPP business, from the standpoint of optimizing our regional portfolio balance and investment returns, we will increase the number of rigorously chosen prime power assets, particularly in powerful markets like Asia, the Middle East and the United States. At the same time, under a system of centralized asset management, we will work actively to boost the profitability of existing projects and optimize our portfolio of power assets.
In retail power sales in Japan, despite an environment characterized by sharply fluctuating fuel prices, we will continue efforts to secure new electricity sources and expand the scale of the retail sales market, while also moving assertively to realize added value on the environmental front.
In the overseas water and sewerage systems sector, our eye will be on acquiring prime assets in promising markets, namely Central and South America, China, Europe, and the Middle East.
In the IT and telecommunication projects sector, our actions will focus specifically on gaining more contracts for security projects in South Africa, one of our key markets, as well as digital broadcasting operations.
