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Optimism builds in Japan

Japan - Japan's construction industry could finally be coming out of the doldrums. The country’s biggest four construction companies have all reported improved first half results this month, leading to optimism in the sector.

Japan's construction industry could finally be coming out of the doldrums. The country’s biggest four construction companies have all reported improved first half results this month, leading to optimism in the sector. Taisei Corporation, Kajima Corporation, and Shimizu Corporation all reported double-digit growth in operating profit for the six months through September 30. Obayashi Corporation posted a group net profit of 3.89 billion yen (US$35.7 million) for April-September after a net loss of 4.43 billion yen a year earlier. Revenues rose 9.7% to 542 billion yen (US$4.9billion).

“From a mood perspective, things have been getting better,” Obayashi Corp Executive Vice President Eiji Noma said. “Public sector projects continue to fall ... but if the economic recovery continues we can hope to see effects from an upturn in capital spending this year,” he added. The brighter outlook was endorsed by the Bank of Japan, which said in a report on Friday that the economy was in recovery mode, effectively upgrading its assessment for a third straight month.

Crucial to the better results have been efforts to select projects with an eye on profitability rather than padding orders as the industry grapples with slashed public works spending. The big four are also carrying mountains of debt left over from the economy's bubble period more than a decade ago but they are in better position to bear the load than smaller rivals.

Amid all the gloom in recent years, the four have also been quietly winning overseas business in regions such as China and the Middle East to help counter the domestic downturn.

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