Japanese construction firms see rising profits amid labor shortages

A survey by Teikoku Databank reveals that 90% of 50 major listed construction companies in Japan saw improvements in their gross profit margins for the 2025 fiscal year. This trend is driven by a strategic shift toward profitability over scale, as companies leverage severe labor shortages and limited construction capacity to pass increased material and labor costs onto contract prices.

Total consolidated sales for these 50 companies reached approximately 21.4 trillion yen, a 5.0% increase from the previous year. Leading in revenue growth were Infroneer Holdings (up 32.7%) and Nakano Fudo Construction (up 24.9%). The industry is benefiting from steady public investment in national resilience projects, as well as high demand from private sector developments such as urban redevelopment, logistics facilities, data centers, and semiconductor factories.

The average gross profit margin for the group rose to 13.5%, a 1.7 percentage point increase. Notable improvements were seen at Nippon Kokudo Kaihatsu, which saw a 10.3 point increase, and Taisei Corporation, which rose by 5.1 points. While demand remains robust, experts warn that deepening labor shortages due to a declining population will require companies to focus on productivity and strengthening management foundations.