Project Schedule Delays and Construction-Cost Fluctuations Due to Contamination Conditions

「Progress was made on large projects whose construction starts had been delayed for customer-related and other reasons, as well as on large in-situ remediation projects undertaken as prime contractor, resulting in a recovery in revenue and an improvement in the cost ratio. The recovery trend is expected to continue through the fourth quarter of the current fiscal year, with both revenue and profit expected to meet the initial forecasts for the fiscal year.」

「Orders were progressing as planned. However, revenue and profit declined year on year because construction on a large project was delayed for customer-related reasons, while projects won at the expense of profit to build a track record as part of the sales strategy were completed at the same time.」

「Because the start of construction on several large projects was postponed during the fourth quarter of the current fiscal year, revenue for the current consolidated fiscal year declined from the previous fiscal year.」

「In addition to surging land prices, inflation-driven increases in construction material prices have resulted in a growing number of projects being suspended or abandoned.」

「Competition for land acquisition has intensified and land prices have surged. Combined with inflation-driven increases in construction material prices, this has led to a growing number of projects whose plans have fallen through.」

「The soil contamination countermeasures business recorded higher revenue and profit because construction on a large project won the previous year was completed and the cost ratio improved.」

「The soil contamination countermeasures business recorded higher revenue and profit because construction progress on a large project won the previous year exceeded plan and initiatives to improve the cost ratio proved effective.」

「In addition to delays in starting construction due to COVID-19, the acceleration of real estate transactions and intensifying competition for land acquisition have led to a tendency for budgets related to soil contamination countermeasures to be reduced.」

「Partly due to the impact of COVID-19, projects in Japan were increasingly postponed to the next fiscal year because of delayed construction starts or had their budgets reduced. In China, customers revised their plans and administrative procedures were delayed, resulting in lower revenue.」

「Although work stoppages due to COVID-19 had ended, several projects had been postponed to the next fiscal year or later, and part of production remained stalled, including during the second quarter of the current fiscal year.」

「Due to the impact of COVID-19, some projects were delayed in starting construction and others that were already under construction were temporarily suspended, causing part of the planned production to stall during the first quarter of the current fiscal year.」

「Ordinary profit was ¥518.854 million, up 299.3% year on year. The main factors behind the increase were a substantial improvement in the profit margin from the sale of high-margin properties in the brownfield redevelopment business, as well as the disappearance of temporary factors that had arisen in the soil contamination countermeasures business during the first half of the previous fiscal year, including upfront investment in a new construction method and delays in launching new businesses.」

「Although revenue declined because product sales were weak and some construction projects progressed slowly, profit increased as the benefits of an improved cost ratio began to emerge.」

「By contrast, in the latter half, after those factors had run their course, the company was able to improve its profit margin substantially.」

「Although the gross profit margin for soil contamination surveys and countermeasures has recently been improving, the business has not yet recovered from profit-reducing factors such as the high proportion of high-cost-ratio projects among the remediation projects through the second quarter of the current fiscal year and increased upfront investment in a new construction method.」

「Sales and orders were generally firm, but higher operating expenses, together with increased research and development expenses for the in-situ thermal desorption method, reduced profit.」

「In addition to higher operating expenses, increased upfront investment in a new construction method is putting pressure on profit, making the achievement of planned profit an important issue going forward.」

「Although revenue increased significantly year on year, segment profit declined substantially year on year due to higher operating expenses, upfront costs for introducing in-situ thermal desorption technology, and a deterioration in the cost ratio as excavation and removal and the collection and transportation of contaminated soil accounted for a larger proportion of work while the company developed new customers.」

「As a result, although revenue increased significantly year on year, segment profit declined and the segment reported a loss due to higher operating expenses, a deterioration in the cost ratio as excavation and removal and the collection and transportation of contaminated soil accounted for a larger proportion of work, and the progress of some unprofitable projects running ahead of schedule.」

「Although revenue increased significantly year on year, segment profit declined and the segment reported a loss due to higher operating expenses, a deterioration in the cost ratio as excavation and removal and the collection and transportation of contaminated soil accounted for a larger proportion of work, and the occurrence of some unprofitable projects.」

「The timing of soil contamination surveys and soil contamination remediation work may be delayed for reasons beyond the control of the Group, including delays in facility closures or in the start of demolition work due to various circumstances.」