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Japan contractors turn builders' market into record profit

Investors betting fiscal 2017 forecasts are too cautious

Contractors' labor costs rose less than expected in fiscal 2016.

TOKYO -- A building boom handed four leading Japanese general contractors record net profits in the year ended March despite a deepening labor shortage -- or perhaps because rising labor costs gave companies the upper hand in negotiations.

Obayashi, Kajima, Taisei and Shimizu together booked 558.7 billion yen ($4.93 billion) in operating profit, beating the sum of their initial projections by 49%. A spate of redevelopment projects and infrastructure demand, primarily in the Tokyo area, bolstered their leverage in price talks, fattening profit margins on construction.

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