Sekisui Says Demand Increase to Help Meet Earnings Targets
“We are getting a good feel about delivering decent results based on our earnings targets,” President Toshinori Abe, 61, said in an interview in Tokyo on July 16, adding that back orders for homes are rising faster than the company had anticipated.
Sekisui in March forecast sales to rise 7.8 percent to 1.74 trillion yen ($17 billion) in the year ending Jan. 31 from a year earlier. Orders on average for the company gained 15 percent in the first five months ended June 30 from the same period last year.
Prime Minister Shinzo Abe’s pledge to end 15 years of deflation have fueled expectations that mortgage rates and land prices, which are about half of what they were after the peak of the bubble economy in the 1980s, will start rising. Japan’s housing starts rose for a ninth month in May, the longest streak since the period ended February 2011.
A fixed-rate mortgage loan for 35 years rose to 2.03 percent in June from an all-time low of 1.8 percent in April, according to the government-affiliated Japan Housing Finance Agency.
Sekisui shares rose 0.9 percent to 1,437 yen at the close of trading in Tokyo, the highest in two weeks. The stock has gained 53 percent this year, compared with a 30 percent increase in the 94-member Topix Construction Index, which includes Sekisui.
While the government’s plan to raise the consumption tax is spurring buyers to purchase before the increase comes into effect, the government should be careful how it deals with an expected decline in demand following the change, Abe said. Japan plans to double the tax rate to 10 percent from 5 percent by 2015, with the first increase to 8 percent scheduled in April 2014.
“It doesn’t make sense to introduce a tax increase when the economy is not yet fully recovered,” Abe said. “What matters to us the most and the country as a whole is economic recovery and revitalization.”
Housing starts nationwide gained 6.2 percent to 893,002 units in the year ended March 31, the fastest pace since 1996, according to the land ministry. Supplies declined 22 percent in a decade to March 2011 from the previous 10 years, it said.
Tailor-made houses and rental housing have seen “solid growth,” Abe said. The Osaka-based company plans to strengthen its home-building segment by improving its energy-saving and quake-resistant technology to differentiate itself from competitors and to attract more homebuyers, he said.
“The customer preference has changed over time,” Abe said. “When homebuyers are happy with our products, they are likely to bring more business opportunities to us.”
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