Earnings volatility from fluctuations in real estate market conditions and construction costs and excess inventory
First written in FY2017. 14 of 34 entries say "Materialised", first in FY2018-Q2. Latest entry: 2026-08-06.
Forlife moved to the "Worse" side of this theme in 2020, 2 years before the typical company in this theme (2022).
The whole theme swung hardest in 2020: 8 of 22 companies on the "Worse" side.
12 other companies' latest entry also says "Worsened".
- FY2026WorsenedAnnual report
「This was mainly due to a ¥787.348 million profit before income taxes and a ¥69.621 million increase in contract liabilities, partly offset by a ¥760.433 million increase in inventories and ¥406.229 million in income taxes paid.」
Inventories increased by ¥760.433 million, and balances of real estate for sale and real estate under development for sale also increased. Exposure to the possibility that sales and valuation conditions could affect results and liquidity has expanded. - FY2025MaterialisedAnnual report
「Although profit margins declined due to sales activities involving partial price adjustments, the increase in the number of homes sold resulted in net sales and segment profit exceeding the previous fiscal year.」
Sales involving price adjustments actually took place, materialising as lower profit margins. Meanwhile, the increase in the number of homes sold improved the amount of profit in the ready-built housing business. - FY2025-H1MitigatedAnnual report
「Meanwhile, on the earnings front, gross profit increased as a result of measures including lower land acquisition costs and the containment of increases in building costs, resulting in higher profit on lower revenue.」
In the ready-built housing business, reducing land acquisition costs and containing increases in building costs have demonstrated the effectiveness of measures to address profit pressure from fluctuations in construction costs and acquisition prices. - FY2024-Q3MaterialisedAnnual report
「Profitability declined from the same period of the previous year because there were fewer high-margin properties than in the previous year and, in addition to rising land prices and soaring building material costs, weakening consumer sentiment led to an increase in properties sold after price reviews aimed at broadening the customer base.」
Rising land and building material prices, weakening consumer sentiment and an increase in sales following price reviews continue to materialise as lower profit margins in the ready-built housing business. - FY2024-Q2MaterialisedAnnual report
「During the cumulative second quarter, profit margins declined from the same period of the previous year because, in addition to rising land prices and soaring building material costs, weakening consumer sentiment led to an increase in properties sold after price reviews aimed at broadening the customer base.」
Against a backdrop of rising land and building material prices and weakening consumer sentiment, sales following price reviews increased, and operating profit in the ready-built housing business fell 58.8% year on year to ¥206.079 million. - FY2024-Q1MaterialisedAnnual report
「In the ready-built housing business, activity had been sluggish since last autumn, when housing demand stimulated by the COVID-19 pandemic had run its course, but the company focused on the early sale of completed inventory, and the number of homes delivered increased slightly year on year. Profitability declined from the same period of the previous year because, whereas there had been many properties with relatively high profit margins in the same period of the previous year, during the cumulative first quarter the number of properties sold at reduced prices increased amid rising land prices and soaring building material costs, as well as weakening consumer sentiment.」
Rising land and building material prices, weaker consumer sentiment and an increase in sales at reduced prices have materialised as lower profit margins in the ready-built housing business. - FY2023MaterialisedAnnual report
「During the fiscal year, these initiatives secured sales results above the previous year. However, rising land prices and soaring building material prices pressured profits, resulting in each level of profit falling substantially below the forecast.」
Rising land prices and soaring building material prices affected actual results by causing each level of profit to fall substantially short of the forecast. - FY2023-Q3MaterialisedAnnual report
「In the ready-built housing business, activity had been sluggish since last autumn, when demand from homebuyers moving house had run its course, although the number of homes delivered remained firm. Profit, however, was substantially below the same period of the previous year due to the effects of COVID-19 and material shortages and price increases caused by the wood shock.」
Material shortages and price increases caused by the wood shock and other factors have materialised as profit in the ready-built housing business falling substantially below the same period of the previous year. - FY2023-Q2MaterialisedAnnual report
「Meanwhile, on the profit side, higher land costs and soaring material prices pressured profits, resulting in lower earnings.」
Higher land costs and soaring material prices materialised during the quarter as a 14.0% decline in operating profit in the ready-built housing business. - FY2023-Q1MaterialisedAnnual report
「The surge in construction costs had a significant impact on profitability, and profitability in detached housing remained weak.」
It has been explained that the risk of soaring construction costs materialised as weak actual profitability. - FY2022WorsenedAnnual report
「Cash used in operating activities amounted to ¥521.409 million, compared with ¥34.284 million used in the same period of the previous year. This was mainly due to a ¥712.654 million profit before income taxes, offset by decreases in cash resulting from a ¥943.061 million increase in inventories and ¥243.624 million in income taxes paid.」
Inventories increased by ¥943.061 million, resulting in a larger amount of cash used in operating activities. - FY2022-Q3RestatedAnnual report
「In the ready-built housing business, demand for detached homes remained firm despite concerns over trends in COVID-19 and material shortages and price increases caused by the wood shock.」
Concerns over material shortages and price increases caused by COVID-19 and the wood shock have continued. Meanwhile, demand for detached homes has been described as firm. - FY2022-Q2WorsenedAnnual report
「Meanwhile, the impact of soaring timber prices and supply shortages from the so-called “wood shock,” driven mainly by increased demand for housing timber in the United States and China, is becoming more severe, and the housing supply environment remains challenging.」
In addition to the longstanding competition for land acquisitions and rising construction costs, the impact of soaring timber prices and supply shortages caused by the wood shock has become increasingly severe. - FY2022-Q1WorsenedAnnual report
「Meanwhile, the outlook remains uncertain because of the impact of soaring timber prices and supply shortages resulting from the so-called “wood shock,” driven mainly by increased demand for housing timber in the United States and China. In the construction industry, the challenging business environment continues, including higher labor costs due to shortages of construction engineers and persistently high construction-material prices amid an uncertain economic outlook resulting from the COVID-19 pandemic.」
In addition to the existing competition to acquire development sites and rising construction costs, the report specifically identifies soaring timber prices and supply shortages from the wood shock and higher labor costs due to shortages of construction engineers, indicating expanding risks relating to construction and material costs. - FY2021RestatedAnnual report
「The cost of each project in the subdivision housing business depends substantially on the acquisition price of business-use real estate and construction costs.」
The risk of performance fluctuations from land acquisition prices, construction costs, and excess inventory continues to be described, along with measures involving stronger design and construction supply chains and cost management. - FY2021-Q3RestatedAnnual report
「In the new-build small-lot detached housing business in Yokohama and Kawasaki, competition to acquire subdivision sites intensified, and, in addition to higher land acquisition costs, increases in construction costs raised the cost of sales, while end users became more selective, but」
Competition to acquire development sites, rising land and construction costs, and greater selectivity among buyers continue to be indicated. Meanwhile, the subdivision housing business exceeded the same quarter of the previous year in units delivered, net sales, and operating profit. - FY2021-Q2WorsenedAnnual report
「Amid a persistently challenging business environment, including rising construction costs and labor shortages in the construction industry, competition is also expected to intensify further, and the situation remains difficult to predict.」
Rising construction costs, labor shortages in the construction industry, and further intensification of competition are listed together, providing a more specific picture of the challenging business environment. - FY2020RestatedAnnual report
「Competition to acquire subdivision sites intensified, and increases in land acquisition, logistics, and construction costs raised the cost of sales, while end users became more selective.」
Competition to acquire development sites, rising land, logistics, and construction costs, and greater selectivity among buyers continue to be indicated as factors driving fluctuations in performance. - FY2020-Q3WorsenedAnnual report
「Competition to acquire subdivision sites intensified, and, in addition to higher land acquisition costs, increases in logistics and construction costs raised the cost of sales, while end users became more selective, but」
Intensifying competition to acquire development sites, rising land, logistics, and construction costs, and greater selectivity among buyers are all indicated, showing that business-environment risks are expanding. - FY2020-Q2MitigatedAnnual report
「As a result, we have become able to offer proposals that are more market-oriented and broader in scope, and performance is recovering steadily.」
The Company explains that performance recovered after reviewing selling-price setting, standard specifications, and planning meetings, demonstrating the effectiveness of measures addressing the risk of profit compression from inventory and price adjustments. - FY2020-Q1MitigatedAnnual report
「As a result, profit margins improved, and performance has recovered steadily from the third quarter of 2018 to the present.」
The Company explains that, after taking measures relating to pricing and sales operations in response to the past compression of profit from selling-price reductions, profit margins improved and performance recovered. - FY2019MaterialisedAnnual report
「In the subdivision housing business, we were temporarily forced to offer discounts in the first half to adjust sales inventory, resulting in sales and profit falling substantially below plan.」
Adjustments to sales inventory and temporary discounts materialized as the subdivision housing business falling short of its full-year sales and profit plans. Although the profit margin recovered in the third quarter, the impact on full-year results remained. - FY2019-Q3MitigatedAnnual report
「Through the second quarter, profit had deteriorated because properties planned and acquired in the previous fiscal year could not be sold at the originally projected prices and were sold at discounts to accelerate the sale of completed inventory and maintain inventory turnover. In the third quarter, however, profit improved as the discounts narrowed and the Company sold more high-margin properties. As a result, net sales were ¥4,644,326 thousand, down 1.0% year on year, and operating profit was ¥457,991 thousand, down 7.4%.」
Although the difficulty of selling at projected prices and the impact of discounted sales remain, profit improved in the third quarter due to narrower discounts and high-margin properties, partly mitigating the risk of declining profit margins. - FY2019-Q2WorsenedAnnual report
「For properties planned and land acquired in the previous period, the company was unable to sell at the originally projected prices. Discount sales aimed at accelerating sales of completed inventory and maintaining inventory turnover caused the profit margin to decline 3.0 percentage points year on year.」
Although the Company was unable to sell properties at projected prices, the increase in completed inventory and discounted sales materialized as a 3.0-percentage-point decline in the profit margin, quantifying the continuing impact from the previous fiscal year and previous quarter. - FY2019-Q1MaterialisedAnnual report
「For properties planned and acquired in the previous fiscal year, we were unable to sell them at the originally projected prices. Discounted sales aimed at accelerating the sale of completed inventory and maintaining inventory turnover caused the profit margin to decline 1.6 percentage points year on year.」
Higher market inventory, failure to achieve projected selling prices, and discounted sales actually occurred, materializing as a decline in the profit margin of the subdivision housing business. - FY2018MaterialisedAnnual report
「Adjustments to selling prices in the subdivision housing business and the fact that a high-margin land subdivision transaction took place in the same period of the previous year were among the factors contributing to the decline in profit.」
Selling-price adjustments to reduce completed inventory and fluctuations in profit margins materialized as a decline in full-year profit. - FY2018-Q3MaterialisedAnnual report
「In addition to the higher cost ratio resulting from subcontracting costs and other factors, the fact that a high-margin land subdivision transaction took place in the same quarter of the previous year resulted in net sales of ¥4,692,491 thousand, down 1.1% year on year, and segment profit of ¥494,764 thousand, down 30.5%.」
The higher cost ratio resulting from subcontracting costs and other factors materialized as an actual decline in segment profit in the subdivision housing business. - FY2018-Q2MaterialisedAnnual report
「Although the number of units delivered in the subdivision housing business increased, net sales were ¥3,418,759 thousand, down 1.7% year on year, and segment profit was ¥375,623 thousand, down 29.9%, due to deterioration in the cost ratio from higher land acquisition prices, subcontracting costs, and other factors, as well as the fact that a high-margin land subdivision transaction took place in the same quarter of the previous year.」
The deterioration in the cost ratio due to land acquisition prices, subcontracting costs, and other factors materialized as an actual decline in profit in the subdivision housing business. - FY2018-Q1RestatedAnnual report
「The business environment remains challenging, with construction costs remaining high and competition among real estate players to acquire development sites continuing to intensify.」
The continued high level of construction costs and intensifying competition to acquire development sites have been reconfirmed as factors contributing to a challenging business environment. - FY2017First statedAnnual report
「Changes in the acquisition prices of business-use real estate and construction costs resulting from economic conditions and real estate market conditions, as well as excess inventory, may affect our operating results and financial position.」
The report also lists balances including ¥401,354 thousand in real estate held for sale and ¥1,468,843 thousand in real estate under development for sale, and explains the risks from fluctuations in land prices, construction costs, and inventory.