Chiyoda Reports Impressive Financial Results for the Fiscal Year Ended March 2006; New Contracts and Net Income Up Five Years in a Row, Dividend Hike to 10 Yen Brought Forward.

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

Consolidated operating income rose 87.1% from the previous fiscal year to 20,729 million yen on a gain in revenues of 46.0% to 390,875 million yen due to steady progress in the construction of ongoing projects and strong performances by group companies in Japan. Net income was up 50.8% to 19,400 million yen. Net income per common share climbed to 101.27 yen. Revenues, operating income and net income were also higher than the figures forecasted for the fiscal year. The Group plans to pay a dividend of 10 yen per share, achieving in the first year the dividend target for the final year of the medium-term business plan ending in March 2009.

In the global plant market, there was a big increase in demand for the Gas Value Chain services of the Chiyoda Group. As natural gas demand increased in energy-consuming nations such as the U.S., U.K., China and India, there was a high level of gas development investments by gas-producing nations and major energy companies. The price of crude oil remained high due to a combination of rising demand and geo-political instability in oil-producing nations such as Iran, Iraq and Nigeria. In Japan, oil companies made large investments to upgrade their refineries in order to become more competitive. Investments included petrochemical production facilities targeting Asian markets, projects targeting the increasing price gap between heavy and light grades of oil, and large-scale energy-conservation projects.

In this environment, consolidated new contracts increased 95.5% to 804,231 million yen, pushing up the backlog of contracts by 83.8% to 960,500 million yen. Both figures were higher than the forecast and at historical records for the Group. New contracts in Japan increased 25.9% to 112,720 million yen and overseas new contracts increased 114.9% to 691,510 million yen.

Gross profit on completed construction increased 54.7% to 30,552 million yen as revenues increased and the gross margin on these contracts improved by 0.4 point. Furthermore, selling, general and administrative expenses ratio declined by 0.7 point. As a result, operating income was up 87.1% to 20,729 million yen. Ordinary income rose 99.9% to 23,161 million yen due in part to growth in interest income in conjunction with an increase in the Group's share of joint venture assets. After an extraordinary loss resulting from a change in the retirement benefit system, a gain on the reversal of the doubtful account reserve due to the collection of long-term delinquent receivables, and other items, net income was 19,400 million yen, an increase of 50.8%.

In the fiscal year ending on March 31, 2007, based on this outlook and assuming an exchange rate of 110 yen to the U.S. dollar, Chiyoda is forecasting consolidated new contracts of 320,000 million yen, revenues of 420,000 million yen, ordinary income of 28,000 million yen and net income of 16,500 million yen. The Group has already met some of its financial targets for the final year of its medium-term business plan ending in March 2009. Since its basic policy regarding distribution of profit to shareholders is to maintain fair dividends backed by earnings, while building sufficient internal reserves, the Group is projecting a dividend of 14 yen per share.

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.