Kajima construction: £73m loss

Kajima's UK construction division made a loss of £73m last year, following a £2m loss in 2003. However, Kajima said it has no intention of pulling out of the PFI market, which it still views as its core business.
Latest results for Kajima Europe UK Holding (12 months to 31 December 2004) show
turn-over ahead at £210m (£130m), the rise being entirely due to a joint venture workload
of £80m - Kajima did no jv projects in the previous year.
Pre-tax loss ran to £80m (£6m loss in 2003).
Despite the abysmal performance, the highest-paid director enjoyed a pay rise - the latest salary figure of £199,000 was a £10,000 improvement on the previous year.
Kajima Europe UK has three operating divisions: construction; design; and development. Almost all the financial damage emanated from the construction division, although design reported a loss of £330,000 (on a £1.5m turnover) and development was in the red to the tune of £6m.
Kajima hinted at a shake-up of senior management and a review is under way. A spokeswoman said: "We are consolidating our strengths through a process of streamlining, which will involve reinforcing the quality of our teams in the next 12 months."
She added: "The company has begun a process of being selective about the appropriate size and scope of projects it bids for.
"PFI is still a relatively new concept and, while there have been some teething problems, financially we are confident we can solve these issues going forward. PFI is an exciting yet complex sector and we have learnt lessons along the way."
Kajima said that PFI offers a platform for further expansion and that the problems on some of the construction contracts have been sorted out and stability now rules.
In PFI, the plan is to look for more schemes in the health,
education and office accommodation sectors.
To finance the existing shortage of funds, Kajima has taken out a £43m loan from its
parent and has issued £74m-worth of new shares.
Despite its own financial
headaches, Kajima continues to be a beacon of good practice when it comes to paying subcontractors; its average creditor days stood unchanged at just 14.