Asahi Kasei Had Biggest Drop in 16 Years on Tilted Buildingby , , and
Asahi Kasei says its unit didn't properly lay out foundation
Asahi Kasei subsidiary will bear all the costs for repairs
Shares of Asahi Kasei Corp. had the biggest decline in more than 16 years after a unit that did subcontracting work said it didn’t properly install foundation piles at an apartment building in Yokohama that has tilted.
Asahi Kasei fell 14 percent to 792.7 yen at the close in Tokyo on Thursday, the biggest drop since August 1999. Sumitomo Mitsui Construction Co., the contractor, rose 24 percent to 135 yen after it fell 31 percent on Wednesday, while Mitsui Fudosan Co., the seller of the apartment building, advanced 0.5 percent to 3,343 yen.
Asahi Kasei Construction Materials Corp., the subcontractor that worked on the building, didn’t properly install foundation piles and then modified data in the installation report, Asahi Kasei said in a release late Wednesday. The subsidiary is checking the reasons why the data was modified in the installation report and it will bear all the costs of investigating and repairing the damage, Asahi Kasei said.
Asahi Kasei said it will investigate the installation data of about 3,000 buildings that its unit was involved in constructing. The impact on the parent company’s earnings is not yet clear.
Sumitomo Mitsui Trust Holdings Inc., through its subsidiaries, holds 8.17 percent of Asahi Kasei, making it its biggest shareholder, according to data compiled by Bloomberg. Asahi Kasei also holds a stake in Sumitomo Mitsui Trust, according to the data.
The release came after Mitsui Fudosan said on Wednesday it is investigating the apartment building, along with Sumitomo Mitsui Construction, after the building was found tilted. The building was one of four that were part of a project sold in 2006.
The complex structure of the development process that involves developers, construction companies, general contractors and subcontractors, as well as a shortage of workers amid a surge in demand at the time may be to blame, said Nobuya Tsutsui, executive director of the Japan Institute of Architects.
“Who is responsible for what in a development is complicated and that needs to be reviewed going forward,” Tsutsui said. “Not being able to get construction workers and engineers has also had an effect.”
Construction orders have risen after the 2011 earthquake and ahead of the 2020 Tokyo Olympic Games. They gained 14 percent to 6.97 trillion yen ($59 billion) in August, rising for an 11th consecutive month, according to the land ministry.