Business / Corporate

Leopalace21 braces for ¥27.3 billion net loss for fiscal 2019

Kyodo, JIJI

Rental apartment operator Leopalace21 Corp. posted net losses of ¥24.4 billion ($223 million) for the April-September period on Friday, with sales falling 13.3 percent to ¥221.5 billion from the same period last year.

The firm, hit by scandals involving 30,000 defective buildings earlier this year, now expects to incur a consolidated net loss of ¥30.4 billion for the year to March 2020, against the previous forecast of ¥100 million in net profit.

It will book ¥10 billion in extraordinary loss due to expenses related to the scandal over shoddy construction, including costs for improvement work.

On Thursday, Leopalace21 also revised down its sales forecast for fiscal 2019 to ¥447.3 billion from ¥502.2 billion, reflecting a drop in the average apartment occupancy rate due to prolonged repair work and other factors.

In spring 2018, a number of defects were found in rental apartment buildings built by the firm, including a lack of walls to prevent fires from spreading in attics.

The company has launched probes into all of its 39,000 buildings. It is currently implementing repair work after defects were found in 80 percent of the buildings, including possible law violations in around 13,000 structures.

Leopalace21 plans to complete such work for structures with serious defects by the end of next year. It is unclear whether the company will be able to proceed with the plan as scheduled due to labor shortages at the construction sites.

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