Japan's four largest construction companies on Tuesday reported bolstered earnings for the year through March, with the fruits of cost-cutting more than offsetting flat or even declining revenue.
With the central and local governments having curbed public works spending amid shrinking tax revenue, the construction market has been on a steady decline.
But the major general contractors said they are seeing signs of recovery in the private sector, with automakers and electronics makers cranking up capital investment to build production facilities.
Kajima Corp., the country's No. 1 general contractor, said its operating profit for fiscal 2003 jumped 28 percent to 46.42 billion yen, though sales slid 14 percent to 1.62 trillion yen during the same period.
The company attributed its increased profitability to a larger gross profit margin, as it slashed construction costs. It also cut back-office expenses.
Like its rivals, the company said it has become more selective in receiving contracts to avoid unprofitable projects.
However, Kajima was forced to log a net loss of 4.47 billion yen after it booked a 43.3 billion yen charge stemming from a change in its employee pension program.
Similarly, Taisei Corp. reported 21 percent growth in its operating profit, while sales dropped 3 percent to 1.6 trillion yen.
The company's net profit plunged 31 percent to 10.35 billion yen, mainly due to huge one-time losses from a write-down of its properties.
Revenue at Shimizu Corp. and Obayashi Corp. remained virtually flat for fiscal 2003, but their earnings also saw steep growth, both down to net profit level.