Risk of lower orders due to an economic downturn and declining public investment

「The business environment ahead remains uncertain, as private-sector capital investment has begun to weaken and the possibility of renewed intense price competition cannot be ruled out.」

「The order environment remained firm, supported by public investment resulting from the continued national resilience policy and resilient private-sector capital investment.」

「The order environment for construction work remains firm for both public and private investment. In particular, private construction investment related to resorts and tourism in Nagano Prefecture, the company's core operating area, is thriving, supported by the end of deflation, low interest rates, and growing inbound demand,」

「Meanwhile, the outlook for the domestic economy is becoming increasingly uncertain, as concerns about the impact of the aggressive trade and tariff policies being pursued by the new U.S. administration are compounded by instability in foreign exchange markets and the risk of higher energy and raw material prices due to geopolitical risks surrounding Eastern Europe and the Middle East.」

「In the construction industry, the core business of our Group, the order environment remains firm for both public and private investment, although」

「Although the order environment in the construction industry, the core business of our Group, remains firm for both public and private investment, signs of price competition have begun to emerge, particularly in major metropolitan areas, following a decline in large-scale inquiries. Concerns have also arisen about the impact of changes in the Bank of Japan's interest-rate policy on capital investment and other areas.」

「In the construction industry, the core business of our Group, the order environment remains firm for both public and private investment,」

「The order environment in the construction industry, the core business of our Group, is expected to remain favorable, with public investment likely to remain firm and private capital investment expected to stay broadly at the previous year's level amid a recovery in corporate investment appetite and large-scale redevelopment projects in the Tokyo metropolitan area and other major regional cities. However, the earnings environment remains challenging, as factors weighing on profitability, including persistently high construction material prices, the chronic shortage of skilled workers, and higher labor costs associated with the full implementation of work-style reforms, have yet to be resolved. The outlook for business performance therefore remains uncertain.」

「Construction costs remain high due to rising construction material prices and chronic shortages of various skilled workers. As inquiries decline and unsuccessful projects emerge, price competition is intensifying, and the future earnings environment is becoming increasingly uncertain.」

「The order environment in the construction industry, the Group’s core business, has remained generally firm because public investment toward national resilience has continued at an appropriate level. However, private-sector capital investment is showing signs of a pause in investment appetite as a reaction to the COVID-19 pandemic and other factors, and, together with the upward trend in policy interest rates, this is raising concerns about a decline in inquiries.」

「The order and earnings environment in the construction industry, the Group’s core business, has remained generally firm, supported by public investment under extensions of the national resilience policy and demand to extend the service life of social infrastructure. However, private-sector construction investment is becoming increasingly challenging as investment related to the Tokyo Olympic and Paralympic Games and facility renewal investment have run their course, while higher construction costs due to rising construction material prices and labor costs are reducing inquiries and price competition is beginning to re-emerge.」

「The order environment in the construction industry, the Group’s core business, is expected to remain firm, supported by continued public investment under extensions of the national resilience policy. A certain level of private construction demand is also expected from large-scale urban redevelopment, renewal and renovation of aging facilities, and the solid housing market. However, the earnings environment is expected to become even more challenging as pressure for higher labor costs due to soaring material prices and chronic shortages of construction engineers and skilled workers is intensifying beyond previous levels.」

「Since the end of the fiscal year, the upward trend in some material prices, driven by higher fuel and raw material costs associated with the Ukraine crisis, has become increasingly evident day by day. Companies have also begun to defer capital investment, while uncertainty over the course of the COVID-19 pandemic and rising labor costs due to shortages of engineers and skilled workers are adding to concerns that pressure to worsen the earnings environment will intensify.」

「In the construction industry, the Group’s core business, orders for public works have recently been trending downward. In private-sector construction, the number of projects remains firm, supported by solid housing demand and capital investment centered on manufacturers, but profitability is beginning to weaken as major general contractors enter regional projects due to a decline in large-scale projects in major metropolitan areas and as material prices rise and remain high. Concerns are also growing over higher labor costs due to chronic labor shortages, leaving the outlook uncertain.」

「The order environment in the construction industry, the Group’s core business, is expected to remain firm in public investment due to measures to strengthen national resilience and extend the service life of social infrastructure. However, private-sector construction investment is beginning to trend downward. The earnings environment is expected to deteriorate as price competition to secure projects reduces profitability, compounded by higher labor costs due to shortages of technical and skilled workers and increases in the prices of some materials. The outlook remains uncertain.」

「Private-sector investment is being forced to operate in a challenging business environment as order volumes trend downward due to slowdowns in domestic and overseas economies, price competition intensifies, and a gradual decline in earnings is increasingly becoming evident.」

「Although public investment remains high, supported by reconstruction and recovery demand following natural disasters and policies to strengthen national resilience, private-sector capital investment is increasingly weakening due to deteriorating performance, primarily caused by the COVID-19 pandemic, delays in demand recovery and other factors」

「Declines in the numbers of new homes started and launched, together with adjustments in private-sector capital investment, indicate that a decline in demand accompanying economic deterioration is beginning to emerge」

「In the construction industry, the Group’s core business, some general contractors suspended construction work between the issuance and lifting of the state of emergency, but the impact on operating performance was limited and the earnings environment did not deteriorate significantly. In contrast, the order environment has gradually become more restrained, particularly in private-sector capital investment.」

「The market is significantly affected by fluctuations in domestic economic conditions. In the regional areas that form the Group’s business base, construction investment is generally at a standstill due to stagnating economic activity caused by the spread of COVID-19 and other factors. The Company recognizes that, if this turns downward, it could trigger a renewed period of intense competition over order prices.」

「Looking ahead, although the increasing number of foreign visitors to Japan and the upward trend in public works are positive factors, the earnings environment is becoming more challenging due to lost ordering opportunities caused by labor shortages and persistently high labor and material costs. Economic sentiment is gradually deteriorating, particularly in regional areas.」

「In the construction industry, the Group’s core business, public investment is expected to increase due to demand for restoration and reconstruction following repeated large-scale natural disasters. Meanwhile, in major metropolitan areas, where Olympic-related investment and large-scale redevelopment appear to have peaked, condominium prices have surged because of higher construction costs, sales have slowed, and the numbers of units started and launched have remained low, creating unprecedented conditions. In addition, chronic labor shortages are constraining business activity and suppressing new construction investment, raising concerns that declining momentum to stimulate the economy could lead to an economic slowdown. The environment is increasingly requiring even more cautious business management.」

「Because the Group, whose business base is in regional areas, is affected quickly by declines in new construction investment due to the declining birthrate and aging population and by economic downturns」

「In the construction industry, the Group’s core business, demand for restoration from large-scale natural disasters is expected going forward. At the same time, in major metropolitan areas, new inquiries for large-scale redevelopment projects and hotels and condominiums for sale, based on expectations of the Tokyo Olympics and growing inbound demand, are beginning to level off. Rising construction costs, declining public investment in regional areas, and increasingly severe labor shortages, making it more difficult to respond to orders, are also contributing to an environment that requires more cautious business management than before.」

「In regional areas, the business environment continues to contain risks of deteriorating operating performance, including broad restraints on public investment, sluggish demand associated with increasingly severe labor shortages and population declines, and rising prices of materials and equipment.」

「In regional areas, the decline in public works and new large-scale projects has continued, beginning with the Tohoku region, where reconstruction demand is easing. In addition, constraints on new construction investment due to increasingly severe labor shortages and sluggish demand associated with population declines meant that construction volumes did not increase significantly.」

「In regional areas, profitability in both public- and private-sector construction has begun to trend downward as inquiries decline」

「In the construction industry, the Group’s core business, the operating environment is shifting toward one in which more cautious business management than ever is required. Signs of intense price competition are beginning to emerge amid a chronic labor shortage, restraint on additional investment following the completion of major capital investment cycles, and an overall decline in public investment in regional areas.」

「In regional areas, the downward trend in inquiries is gaining momentum」

「In regional areas, sustained large-scale investment cannot be expected because of population declines, and new investment, particularly in public civil engineering projects, is increasingly trending downward. As a result, prospects for expanding the business are becoming more challenging」

「In the regional areas that form the Group’s business base, private-sector capital investment has begun to show signs of caution, while a marked decline in public civil engineering projects has emerged, particularly since the beginning of the current fiscal year. As a result, the business environment is becoming less conducive to optimism.」

「The yen has been strengthening following the United Kingdom’s decision in late June to leave the EU, while delays in the economic recovery of emerging countries and other factors are adding to uncertainty about the economic outlook.」

「If economic conditions deteriorate in the regions where the Group operates or public investment declines, orders may be affected, which could adversely affect the Group’s operating performance and financial condition.」