July 31 (Bloomberg) -- Mitsubishi Estate Co., Japan’s biggest developer by market value, said first-quarter profit gained 44 percent after a sevenfold increase in profitability of its residential business.
Net income rose to 17.1 billion yen ($174 million) in the three months ended June 30 from 11.9 billion yen a year earlier, the company said in a statement to the Tokyo Stock Exchange. Revenue gained 16 percent to 227.8 billion yen.
The results bring Mitsubishi Estate a step closer to achieving an increase in full-year profit for the first time in three years. The inventory of apartments fell to 56 units in June, the lowest level since at least 1998, the company said.
The operating profit margin for Mitsubishi Estate’s residential division rose to 3.6 percent in the first quarter from 0.5 percent a year earlier, it said in the statement. The company expects the profit margin to double to 6.9 percent by March 2014, it said.
Japan’s housing starts rose for a 10th month in June, the longest streak since December 1996, according to a report released today by the Ministry of Land, Infrastructure, Transport and Tourism in Tokyo.
Developers are rushing to build homes before a consumption tax increase next April. Japan plans to double the tax rate to 10 percent from 5 percent by 2015, in two steps. The first increase is scheduled to come in April 2014 when the tax is raised to 8 percent.
Operating profit from the residential business gained to 2.2 billion yen from 297 million yen in the first fiscal quarter, the company said. Operating profit from the office business fell 6.4 percent to 26.7 billion yen after Mitsubishi Estate closed some office buildings.
Shares of Mitsubishi Estate fell 2.8 percent to 2,491 yen at the close in Tokyo, trimming the year-to-date gain to 22 percent. The Topix Real Estate Index has climbed 37 percent this year.
The Tokyo-based developer kept its profit forecast at 58 billion yen for the year ending March 31, on sales of 1.07 trillion yen.
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