Sumitomo Mitsui Construction says it cannot estimate earnings impact of scandal

Sumitomo Mitsui Construction Co. said Wednesday it cannot estimate the impact on future earnings of a scandal that began with falsified data for pilings of a now-tilting condominium building.

Speaking at a news conference to announce earnings results, Sumitomo Mitsui Construction Vice President Yoshio Nagamoto apologized for causing worry, saying his company bears “grave responsibility” for the scandal as the prime contractor for the tilting condominium building at the center of the expanding scandal.

“It is difficult at this point to calculate the impact on our earnings in a rational way,” Nagamoto said, although he acknowledged that it is unlikely to be “small.”

It is the first time since the scandal surfaced in mid-October that the company’s management has apologized in public.

Sumitomo Mitsui Construction revised upward its full-year earnings outlook for fiscal 2015, saying it now expects a group net profit of ¥9 billion ($73 million) rather than the ¥6 billion projected earlier. Its consolidated operating profit is projected to reach ¥15.8 billion, up from ¥12 billion, on revenue of ¥404 billion.

The scandal, in which a worker at an Asahi Kasei Corp. subsidiary was found to have fabricated data on piling work at the condominium building in Yokohama, has raised public concerns about the safety of buildings in general.

Asahi Kasei is checking 3,040 piling work projects nationwide on which subsidiary Asahi Kasei Construction Materials Corp. worked over the past decade, and is expected to release its findings soon.

Nagamoto said Sumitomo Mitsui Construction has not experienced a major fallout from the scandal, telling reporters that the highest priority for management is to “make utmost efforts to resolve the issue before us.”