UPDATE 2-Mitsui Fudosan may raise outlook after condos rev up Q1
* Keeps annual operating profit forecast at 115 bln yen
* 2011/12 outlook is below market consensus of 120.7 bln
* Says may revise up outlook; apartment sales resilient
* Shares end down 0.9 pct before announcement (Adds details, comments from executive)
TOKYO, July 28 (Reuters) - Mitsui Fudosan Co , Japan's biggest property developer, said it may raise its full-year forecast after a recovery in apartment sales helped boost quarterly profit by 20 percent.
Japan's property market, struggling to regain strength after the global financial crisis, was hit again by the March earthquake as would-be homebuyers delayed purchases and companies postponed expansion plans.
But Mitsui Fudosan, which competes with second-ranked Mitsubishi Estate Co , said sales of its apartment units have been unexpectedly strong despite the disaster, while its office leasing business also generated a small increase in profit thanks to new building openings.
"Thankfully the March earthquake had little negative impact on our apartment sales. I think we are moving towards outpacing our annual operating profit target," Mitsui Fudosan executive managing director Hiroshi Asai told reporters.
Mitsui Fudosan, which earns nearly three-quarters of its profit from office and building leasing, booked an operating profit of 21.97 billion yen ($282 million) for its April-June first quarter, up from 18.36 billion yen a year earlier.
Its apartment and house sales division turned a profit of 3.3 billion yen, swinging from a year-earlier loss of 1.9 billion yen. Profit from building leasing edged up 2.2 percent to 24.3 billion yen.
Mitsui Fudosan left unchanged its annual forecast of a 115 billion yen profit for the year to March, down from 120.1 billion yen last year. Its forecast is lower than the average forecast for a 120.7 billion yen profit in a survey of 24 analysts by Thomson Reuters I/B/E/S.
Tokyo's office market, the world's second largest, still faces a rocky road as a number of big office buildings are expected to open this year and next.
The massive supply could further weigh on an office market already struggling with falling rents after the global financial crisis while the earthquake in March dulled corporate interest in expansion.
The average office vacancy rate for Tokyo's five central wards stood at 8.81 percent in June, near its post-war record of 9.19 percent marked in March, according to data from office broker Miki Shoji.
More than 3.3 million square metres of office space -- nearly the size of New York's Central Park -- is expected to be added to supply in 2011 and 2012, threatening to compound vacancy worries.
Asai said the average vacancy rate for Mitsui Fudosan's office buildings in the Tokyo area stood at 4.4 percent in June, and is likely to remain above 4 percent for a while.
Shares of Mitsui Fudosan, which owns a 54-storey office building on Manhattan's Avenue of the Americas, have lost about 11 percent since the start of this year, underperforming a 2.9 percent fall in the benchmark Nikkei 225 average during that period.
Before the announcement, Mitsui Fudosan shares ended down 0.9 percent at 1,439 yen. Shares of rival Mitsubishi Estate, set to announce results on Friday, fell 1.7 percent to 1,390 yen, while Tokyo's benchmark Nikkei average dropped 1.5 percent.
($1 = 77.965 Japanese Yen) (Reporting by Mariko Katsumura; Editing by Chris Gallagher)
- Sierra Leone's chief Ebola doctor contracts the virus
- Gaza bloodshed deepens as airlines shun Israel |
- Exclusive: Ukraine rebel commander acknowledges fighters had BUK missile
- TransAsia Airways plane crashes in typhoon-hit Taiwan, killing 47 |
- South Korea ferry fugitive hid behind cabin wall, bags of cash at hand