Midsize general contractors Kumagai Gumi Corp. and Hazama Corp. on Monday reported sharp declines in sales and profits for the first half to Sept. 30, blaming a shrinking construction market and mounting debts.
But top executives of the two firms -- both of which recently received huge bailouts from their main creditors -- said they have no intention of changing their current restructuring plans, despite recent plunges in their companies' stock prices.
For the April-September period, Kumagai Gumi's group sales fell 17.9 percent to 245.74 billion yen. It racked up a net loss of 3.1 billion yen, compared with a loss of 4.23 billion yen last year.
The company's consolidated operating profit fell 18.4 percent from the same period the previous year to 1.2 billion yen, and it reported a group pretax loss of 3.84 billion yen, against a 3.97 billion yen loss a year earlier.
The firm's interest-bearing debts stood at 571.1 billion yen at the end of September, down 65.7 billion yen from the previous year.
Hazama reported group sales of 170 billion yen, down 7.5 percent from the previous year, and a group net loss of 1.72 billion yen, marking a slight improvement from a 1.83 billion yen loss in the same period a year earlier.
Its consolidated operating profit declined 24.6 percent to 4.69 billion yen, and its pretax profit slipped 61.1 percent to 1.47 billion yen.
Hazama's interest-bearing debts were 286.74 billion yen in September, down 2.2 billion yen from a year earlier.
Kumagai and Hazama officials stressed interest-bearing debts have been reduced in line with their firms' restructuring plans, but market players hold a negative outlook. on the two firms.
On Nov. 13, the stock price of Kumagai Gumi slipped below 10 yen in response to investors' expectations that Prime Minister Junichiro Koizumi's Cabinet would place more pressure on creditor banks to get rid of their bad loans to debt-ridden construction companies.