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TCG Group consists of 21 companies. Can you tell us about the Group as well as how you view the Group's strength in comparison to your competitors? 


 Our Group operates in the architecture, civil engineering and real estate industries. Takamatsu Group, with Takamatsu Corporation at its core, focuses on the real estate utilization business in the private construction sector, while Asunaro Aoki Group, with mid-sized general contractor Asunaro Aoki Construction at its core, deals more in the public and civil engineering sectors. These two groups cooperate to create synergistic effects for the Group.
 Our Group has two strengths. First, Takamatsu Corporation's land utilization business is firmly rooted as a core business. Second, we are highly adaptive to environmental changes thanks to our balanced portfolio of Group companies with strengths in different fields, achieved through M&A. Takamatsu Group, with its focus on the private sector, and Asunaro Aoki Group, with strengths in the public sector, also strike a balance between architecture and civil engineering. The combination of the two Groups works to stabilize revenue and profit, even in the constantly changing economic and environmental climate.


Please tell us about the business model of Takamatsu Corporation, the core and founding company of the Group. 


 In the 1960s we entered into the field of purpose-built rental condominium construction through acting as an agent of our clients to apply for public housing loans, which generated a huge amount of attention as well as revenue growth. We realized a number of successful construction projects by focusing on consulting, which we developed as our unique business model combining consulting and construction, which we call the "C&C" (consult & construct) method or "development sales." Our work in consultation started with construction and financing, but later extended into other fields like taxation, legal affairs and post-construction areas such as renting, maintenance and repair.
 The key to our business model is not price, but rather how much value we can propose to our clients, thus our tremendously successful track record has proven to be of great advantage. In addition, another strength of the C&C method is that we are able to accept orders as a solo contractor, while other construction firms mostly win orders through a bidding procedure. In addition, by being able to control the timing of the start of construction, our method enables us to efficiently control the construction schedule as well as secure necessary materials, leading to smooth cooperation between us and our partner companies. At the same time, this business model requires patience and imposes a significant financial burden because we sometimes must wait for years without a business outcome after a proposal. In this sense, our business model is not something every company can follow.


In the Mid-Term Plan "Create! 2022", you have set forth the goal of creating new business areas. What is your position on M&A? 


 Our Group is one of the rare construction companies in Japan that have expanded through M&A. In the past, it was often said that M&A eventually leads to reduced opportunities to win orders, so it doesn't work in the construction industry. However, we have proactively taken up M&A opportunities and, as a result, transformed ourselves into a Group comprised of many varied and unique companies.
 In recent years, two companies have joined our Group, due mainly to difficulties in management succession planning. These are Shimada Gumi (2012), which now boasts the top share among non-public companies in Japan for excavation of archaeological sites, and Mibu Corporation (2018). However, prior to these two companies, the main reason for conducting M&A was so called bailout M&A. Among the companies that we welcomed through M&A at the time were Asunaro Aoki Construction, a mid-sized general contractor, Mirai Construction, a marine civil engineering company, and Kongo- Gumi, a temples and shrines architecture firm that has more than 1,400 years of corporate history and is often cited as the oldest company in the world. Many companies with distinct features and strengths have joined our Group through M&A.
 There are two criteria for making a bailout-type M&A decision: does the company possess unique strength and is there a good likelihood of turning the company around in terms of profitability? If the answers to these two criteria are positive, we consider the chance of success after M&A to be high. Even if the candidate company is not in good shape, I believe it can be turned around if the management of the company is decisive and firmly believes it has no safe haven to retreat to, so it must stand up and clean away the debt and downsize the company by letting go of unprofitable domains resulting from past diversification. Therefore, the key is whether we can formulate a successful scenario by going back to the basic strength of the company through selection and concentration.
 In order to continue to achieve a high level of growth in the future, it is essential to continue to complement the business with M&A. We will be primarily looking into new M&A opportunities in the business domain of Takamatsu Group, since it is the main engine for future growth. So far, we have been considering about 50 M&A candidate companies a year. Without slowing this pace, we will conduct one or more M&As per year as well as investing around 50 billion yen for M&A in 10 years. As a result, we aim to increase our revenue by around 90 billion yen in 10 years'time by the newly added companies.


Takamatsu Construction Group USA (TCG USA) was established in October 2017 as our first overseas company.
Could you tell us about TCG USA's activities so far and your plans for the future? 


 TCG USA was established to examine whether Takamatsu Corporation's business model can be replicated overseas. So far, we have acquired a property in New York and have expanded to California, with the aim of establishing a highly profitable business model by the fiscal year ending March 31, 2022. After that, we intend to expand our business through M&A and other means based on the business model we have established, and we intend to develop the company into a company with sales of around 10 billion yen in 10 years' time.


In April 2018, Mibu Corporation joined TCG Group through M&A. In April 2019, TCG Group established Takamatsu House. In May 2019, Tatsumi Planning joined TCG Group through M&A. What are your plans for the future with respect to the wooden detached house business? 


 To conduct a successful M&A, it is vital that the deal is "win-win."
 Mibu Corporation is mainly engaged in real estate sales and brokerage, and is well known in the area of Tokyo's Setagaya Ward, an area known for its many high net worth individuals.
 Tatsumi Planning has more than 20 years of experience in the construction of detached houses mainly in the Kanagawa and Yokohama areas. When the M&A targeting Tatsumi Planning was conducted, its real estate development and mega solar businesses were carved out , resulting in only its detached residence construction and renovation businesses joining our Group.
 From now on, in the wooden detached house business, Takamatsu House will develop plans and purchase and sell land, while Tatsumi Planning will handle the construction. In addition, by sharing real estate information with Mibu Corporation in areas where Mibu Corporation has a strong business base, Takamatsu House will purchase land based on the information.
 Although Takamatsu House is currently a subsidiary of Takamatsu Corporation, we expect Takamatsu House to become the third pillar of our core business after Takamatsu Corporation and Asunaro Aoki Construction.



Mid-Term Plan "Create! 2022" lists "Create a Group culture that embraces diversity and compliance." Could you comment on this?


 The basic reason why TCG Group could grow through M&A is that we have traditionally had a corporate culture and evaluation system that respects the diversity and independence of Group companies, with their various foundations, growth patterns and business domains.
 After a company joins our Group through M&A, it is essential that it maximize its unique strength. Therefore, it is important to keep the original name of the company, leave its operation to its management and provide job security and regular bonuses to the employees to boost their morale in order to revive the company. This is based on the idea of respecting diversity.
 At the same time, we have emphasized compliance in the governance of Group companies. One of our Management Credo is to "refuse to overly prioritize profitability, and never use improper or fraudulent methods nor seek speculative profits." We have faithfully upheld this credo for a long time and sincerely believe it is the key to maintaining good relationships with our customers over generations.
 We will continue to uphold this credo in the future through employee training and daily activities.


Please tell us your thoughts on "Create synergy efects" under Mid-Term Plan"Create! 2022." 


 In November 2019, we completed the TOB of Asunaro Aoki Construction, one of the Group's core operating companies, and it became a wholly owned subsidiary. By becoming a wholly owned subsidiary, the barriers between the groups have been removed and the foundation has been put in place to bring synergies to bear on the Group as a whole.
 Going forward, we intend to further strengthen cooperation between the Takamatsu Corporation Group and Asunaro Aoki Construction Group to establish a common management platform and create synergies.
 Currently, we are considering a number of measures to create synergies, such as joint ventures between group companies, such as the joint venture between Takamatsu Corporation and Asunaro Aoki Construction for the construction of large distribution warehouses, collaboration between Takamatsu Corporation and Kongo-Gumi, and performing major repairs and increasing the percentage by Takamatsu Estate and Takamatsu Techno Service for properties built by Takamatsu Corporation.
 We are focusing on the following points.
 First, we respect the diversity and independence of our group companies and will not pursue synergies that inhibit diversity and independence.
 Second, the creation of synergies does not end with the measures mentioned above, and we will continue to consider ways to generate synergies in the future.
 Third, we will pursue synergies to improve the Group's competitiveness and resilience in order to prepare for the risk of deteriorating market conditions. We believe that synergies in this area will become increasingly important in the future given uncertainties in the construction market outlook due to the impact of the spread of the new coronavirus infection.
 Fourth, we will seek to standardize various internal systems, and given the differences in business operations, characteristics and history of each company, we intend to create synergies by giving due consideration to these factors.


Mid-Term Plan "Create ! 2022" also includes "Create value for the economy, society and environment." Please tell us about your SDGs initiatives. 


 These days the SDGs are frequently listed as a major management issue. However, we have emphasized contribution to society for a long time, as indicated in our Corporate Philosophy: "We conduct the construction business as a mutually complementary activity vital to society." A good example of our emphasis on contribution to society is our SDGs Contribution Revenue index. To create this index, we have examined how much of our revenue clearly contributes to the 17 SDGs. For the fiscal year ended March 31, 2020, it accounted for over 20% of total sales, and we plan to raise that figure to 31% by the final year of the Mid-Term Plan. SDGs Contribution Revenue includes constructing reinforced concrete building with their strength exceeding the Building Standards Act by more than 15%, as well as revenue earned by Kongo-Gumi, which is carrying on the tradition of craftsmanship of the temple and shrine carpenters from the sixth century.


How will you proceed with work style innovation? 


 Both Takamatsu Corporation and Asunaro Aoki Construction are aiming for eight days of construction site shutdown every four weeks by the fiscal year ending March 31, 2022. However, if an increase in construction site shutdown days results in the lengthening of construction periods as well as increased costs, we will be unable to meet customer expectations. Thus, productivity improvement as well as improving efficiency in all operations is essential. We plan to improve productivity by the active use of ICT equipment, adoption of labor-saving construction methods, workflow review and other measures.
 In addition, we started working from home in administrative and design departments as well as for office work such as purchasing and quantity surveying when the spread of the new coronavirus pandemic spread, and since it was found that it was possible to perform work from home, we will continue to consider the telecommuting policy in the future.


Could you tell us about human resource development? What are your thoughts on promoting women's participation in the workplace? 


 Concerning the recruitment of new graduates, TCG as a Group hired 235 new graduates in April 2020. We hired 218 in 2019, 238 in 2018, 178 in 2017 and 161 in 2016. This level of hiring is comparable to the largest general contractors in Japan. As such, we are conducting rather aggressive hiring, especially when we consider the fact that the total number of our employees as of the fiscal year ended March 31, 2020 is only 4,389. Our aggressive hiring shows our confidence towards continued growth in the future.
 In recent years we have increased the number of female employees hired. The percentage of women among new graduates we hired has increased as follows: 16.1% for April 2016, 24.4% for April 2017, 24.3% for April 2018, 24.8% for April 2019 and 23.8% for April 2020. Currently, about one in four new graduates we hire is a famale. We are actively recruiting female engineers to work in design and on construction sites. I must admit we are far behind in terms of the number of female managers, but I hope that more female employees will continue working and take up leadership positions even as they enter different life stages. We are also conducting training programs for female managers and female mid-level employees.


Please tell us about shareholder return. 


 Net earnings profit attributable to the owners of parent for the fiscal year ended March 31, 2020 were significantly higher than expected due to favorable performance.
 For the fiscal year ended March 31, 2020, we have decided to pay a dividend of 63 yen, up 3 yen from the previous fiscal year, as we announced at the beginning of the fiscal year.
 Our basic policy is to return profits to shareholders in line with our business performance.
 From the fiscal year ended March 31, 2016, we have set an immediate target of a dividend payout ratio of 30%, with a dividend payout ratio of 21.1%, 23.5%, 25.1% and 29.7%, compared to 15.3% in the fiscal year ended March 31, 2015.
 The dividend payout ratio for the fiscal year ended March 31, 2020 is 25.2%, a decrease of 4.5 percentage points from the previous fiscal year, but in light of the uncertainty of the outlook for the fiscal year ending March 31, 2021 due to the impact of the new coronavirus infection and other factors, we have decided to pay a 63 yen dividend for this fiscal year as well, with the aim of maintaining a stable dividend to our shareholders for this fiscal year and beyond.
 On the other hand, we believe that share buybacks are an effective way of returning profits to shareholders, and we will consider implementing them while taking into account the need to secure liquidity.


Hirotaka Takamatsu
President & Representative Director of the Board