Chiyoda Reports Impressive FY 2006 Interim Results; First-Half Sales and Earnings Exceed Full-Year Forecasts.

YOKOHAMA, Japan -- Chiyoda Corporation (OTC:CHYCF), Japan's leading engineering and construction firm, today reported consolidated financial results for the first half of the current fiscal year ending March 31, 2006.

Consolidated operating profit rose 72.9% from the first half of the previous fiscal year to 8,218 million yen on a net sales gain of 42.2% to 165,515 million yen, exceeding the 15,000 million yen forecast by 10.3% as construction work advanced as planned. Net sales totaled 42,416 million yen in Japan (up 23.4%), and 123,098 million yen overseas (up 50.1%). Ordinary profit increased 75.2% to 9,029 million yen due to growth in operating income and higher interest income. Net profit was up 108.5% to 10,622 million yen. Net profit per share climbed to 55.55 yen.

In the first half of the fiscal year, consolidated new contracts were 442,110 million yen, 264.1% higher than one year earlier. Chiyoda has thus surpassed in the first half its full-year consolidated new contract forecast. New contracts in Japan totaled 65,813 million yen, up 39.3% from the first half of the previous fiscal year, and overseas contracts were 376,297 million yen, a year-on-year increase of 407.3%.

Operating profit increased to 8,218 million yen as the operating profit margin improved by 0.9 percentage points compared to the previous fiscal year to 5%. Since the gross profit margin on completed construction contracts was unchanged, the improvement was the result of an equivalent decline in the SG&A expense ratio. The reduction was achieved by boosting the efficiency of administrative sections that absorbed the continuing increase in compensation for its employees.

Earnings growth was well balanced as growth in net sales accounted for more than 60% of the earnings gain, while almost 40% came from improvement in profit margins. At the end of September, equity totaled 46,579 million yen. This gave an equity ratio of 21.7%, 1.5 percentage points higher than six months ago.

Chiyoda expects that overseas contracts in the second half will be more than 110,000 million yen, mainly from LNG projects. In Japan, the Company is aiming for new contracts of at least 40,000 million yen as petroleum and chemical companies continue to make substantial capital investments. Based on this outlook and assumption of an exchange rate of 110 yen to the U.S. dollar, the Company is forecasting net sales from construction contracts of 600,000 million yen (compared with the previous forecast of 350,000 million yen), ordinary profit of 20,000 million yen (up from 14,000 million yen) and net profit of 17,500 million yen (up from 14,500 million yen) for the fiscal year ending March 2006.

Chiyoda Corporation, headquartered in Yokohama, Japan, provides services on a global basis in the field of engineering, procurement and construction (EPC) for gas processing, refineries, and other hydrocarbon or other industrial plant projects, particularly for LNG, GTL and DME.