Japanese rental company Kanamoto has reported a 3.4% drop in first quarter revenues to JPY35.1 billion (€277 million) amid a slowdown in domestic construction activity. Rental revenues fell 4.7% to JPY32.5 billion (€256 million).

Kanamoto said its overall operating income for the three months to 31 January, 2016, dipped 35.5% year-on-year to JPY4.07 billion (€32 million), while rental operating income dropped 36.6% to JPY3.9 billion (€31 million).

The company said that, although private construction investment in Japan remained brisk against the backdrop of the positive trend in corporate earnings, spending on public works projects reversed course and declined.

In regions such as Hokkaido, where the effects of the decline in public works investments fell most heavily, Kanamoto said the result was a severe operating environment that produced stagnation, including a drop in construction equipment rental demand that exceeded the company’s projections.

It added that sales of used construction equipment dropped 60% year-on-year, but the comparison was skewed to some extend by the fact that it sold a substantial amount of equipment in the first quarter of last year. In fact, Kanamoto said used equipment sales remained around average.

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