[Company analysis] JGC Corporation (日揮)

「JGC Corporation (日揮)」was established in 1928. Originally its name was「Japan Gasoline Co., Ltd.(日本揮発油株式会社)」. Initially, the purpose of the establishment was to conduct refinery business like the company name of "Japan Gasoline".  At the beginning of operation, they  purchased a process license for the U.S company 「Universal Oil Product」, but eventually they gave up the refinery business.  Instead, this company started engineering business from the 1930s and now became the largest engineering company in Japan. The number of consolidated employees is 7,610.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	JGC Corporation
Company name (Japanese)	日揮
Date of establishment	Thursday, October 25, 1928
Headquarters location	〒220-6001 神奈川県横浜市西区みなとみらい2丁目3番1号
Capital	23,511
Consolidated sales	619,241
Consolidated operating profit	23,249
Consolidated total assets	708,855
Consolidated capital	410,350
Capital adequacy ratio	57.9%
Consolidated number of employees	7,610

 

 

 

2. Summary and Features

 
In fact, compare with the other general construction company such as Japan's big five general contractors, 「JGC Corporation」does not have enormous scale of sales. However, in the field of petroleum refinery, petrochemical and chemical plant, LNG plant, and natural gas processing plant engineering, JGC is best company in Japan. In the past,「Toyo Engineering Corporation(東洋エンジニアリング)」and「Chiyoda Corporation(千代田化工建設)」were rivals, but now sales of「JGC Corporation」is overwhelmingly bigger than them.

Since its establishment, 「JGC Corporation」has carried out more than 20,000 projects in 80 countries. In particular, they have designed and built LNG plants that account for more than 30% of global production. Based on a variety of engineering technologies and excellent project management capabilities, JGC is undoubtedly one of the world's highest oil and gas engineering contractors. In particular, overseas sales account for a very high percentage, with 68% of 2018 sales coming from overseas.

In the latter half of the 2000s, there was a economical boom in plant construction due to high oil prices. At that time, 「JGC Corporation」implemented a selective order strategy. Although sales were reduced, they could achieve the largest profit in the history of JGC. Since then, they promoted diversification of business development not only in the construction of oil and gas field plant equipment, but also in operation and maintenance services after plant construction, and business investment and operation.

In 2008, 「JGC Corporation」signed a contract with the Tokyo Metropolitan Psychiatric Center for facility maintenance, operation and procurement for about 15 years. This is the first hospital PFI business for an engineering company in Japan. This company have also begun environmental related businesses, such as emissions trading, and they are also engaged in water quality improvement projects in China. In addition to their core business of plant construction, JGC are also focusing on business diversification, such as conducting an oil exploration business with our own 100% investment in North America.

 

 

 

3. Major Business

 

■ EPC business
The main business is the construction of oil and gas production infrastructure. JGC has the world's highest level of technical capabilities and achievements, especially in the LNG plant field.

■ Project management business
JGC's Comprehensive project management was carried out at every stage of the project, from plant design to equipment procurement, construction, operation and maintenance.

■ Functional Materials Manufacturing Business
「JGC Corporation」also manufacture and sell chemical catalysts and environmental protection catalysts for refinery and petrochemical plants. In particular, in the field of petroleum refining catalysts, they have the world's top share. Utilizing nanotechnology accumulated in the field of manufacturing catalysts, this company are also developing and selling high value-added products such as information and electronic materials, optical materials, and cosmetic materials.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		693,152	722,987	619,241
Consolidated operating profit		-21,496	21,495	23,249
Consolidated total assets		646,291	684,921	708,855
Consolidated net assets		383,260	395,779	410,350
Breakdown of sales	Resource development(Oil・Gas)	93,122	105,472	119,991
	Oil refining related	108,135	106,715	87,298
	LNG related	327,543	319,270	187,816
	Chemical related	56,216	76,295	43,248
	Power generation, nuclear power, new energy	36,259	41,395	89,706
	Lifestyle related	9,949	6,538	15,678
	Environment ralated	8,562	9,107	16,132
	Others	53,367	58,136	13,377
	New Functional material development	0	0	45,996