ROA Declines for Fourth Consecutive Year Among Construction Firms in Tohoku Region, Survey Shows
November 21, 2025
The Miyagi branch of Higashi-Nihon Kensetsu Gyō Hoshō (East Japan Construction Guarantee) has released its latest “2024 Financial Statistics for the Construction Industry,” analyzing the financial performance of 3,327 construction companies across the six prefectures of the Tohoku region.
The study shows that the return on assets (ROA)—a key measure of overall profitability—fell for the fourth straight year, declining 0.4 percentage points year-on-year to 2.75%. This is 1.97 points lower than the East Japan average of 4.72%, marking the lowest level among the regions surveyed.
A significant factor behind the decline is the sharp downturn in Miyagi and Iwate, where post–Great East Japan Earthquake reconstruction demand has largely ended. ROA in Miyagi was just 0.61%, while Iwate recorded 0.98%, both far below the regional benchmark.
Profitability by sector and company size
ROA by business category in Tohoku was as follows:
-
Civil engineering & building: 2.65%
-
Civil engineering: 2.12%
-
Building: 0.07%
-
Electrical: 5.61%
-
Plumbing: 3.30%
By annual sales volume, companies with revenues of 10–30 billion yen posted the highest ROA at 5.83%, followed by:
-
5–10 billion yen: 5.52%
-
Over 30 billion yen: 5.46%
-
1–5 billion yen: 3.35%
-
Under 1 billion yen: –2.6%
By prefecture (excluding Miyagi and Iwate), ROA results were:
Akita 5.77%, Yamagata 3.78%, Aomori 3.69%, and Fukushima 3.34%.
Operating margins reveal severe conditions in core construction sectors
The operating profit margin, indicating earnings generated from core business activities, showed significant stress particularly in civil engineering and building:
-
Civil engineering & building: 1.32%
-
Civil engineering: –0.39%
-
Building: –1.95%
-
Electrical: 3.01%
-
Plumbing: 0.83%
The Tohoku-wide average margin was 0.47%, nearly 2 points below the East Japan average of 2.36%.
Productivity remains a challenge
Value added per regular employee—an indicator closely tied to industry-wide productivity issues—averaged 11.04 million yen in Tohoku, 1.18 million yen lower than the East Japan average. By category:
-
Civil engineering & building: 12.85 million yen (down 20,000 yen)
-
Civil engineering: 11.69 million yen (down 170,000 yen)
-
Building: 10.21 million yen (down 210,000 yen)
-
Electrical: 9.97 million yen (up 470,000 yen)
-
Plumbing: 9.23 million yen (up 210,000 yen)
Financial soundness shows improvement
Despite declining profitability, overall financial resilience strengthened:
-
Equity ratio: up 1.68 points to 48.73% (above East Japan’s 44.32%)
-
Current ratio: up 10.19 points to 374.33% (well above 330.27%)
The results indicate that while construction companies in Tohoku maintain strong balance sheets and liquidity, profitability continues to face downward pressure—particularly in civil engineering and building sectors where reconstruction-driven demand has waned.
