To our shareholders
We would like to express our sincere appreciation to all shareholders and investors for their continued support.
In the first quarter of the fiscal year ending on June 30, 2020, orders received were ¥28,009 million, a new quarterly record. Orders from expressway companies remained high, including a large order of about ¥7,300 million from Hanshin Expressway Company Limited. There was also an increase in orders from the national government and local governments, chiefly for seismic reinforcement projects. As a result, the order backlog was ¥68,891 million at the end of September, ¥14,789 million higher than at the end of June. First quarter sales were basically unchanged from one year earlier at ¥13,219 million. Sales of construction materials increased ¥131 million and construction sales decreased ¥127 million, mainly because of a decline in building construction.
Earnings were lower than one year earlier because of a decline in the gross margin on construction projects. Operating profit decreased ¥176 million to ¥2,026 million and profit attributable to owners of parent decreased ¥122 million to ¥1,360 million. We are planning on an increase in personnel expenses resulting from measures to improve compensation and other benefits and an increase in our workforce. Higher expenses for individuals at construction projects is raising the indirect cost of construction and exerting downward pressure on the construction gross margin in this fiscal year. The impact of higher personnel expenses is expected to slowly decrease as construction sales grow.
The climate for receiving orders is remaining very favorable. Expressway companies are implementing large renewal and repair projects. In addition, we expect an increase in orders for seismic reinforcement projects in association with the Ministry of Land, Infrastructure, Transport and Tourism policy of speeding up seismic reinforcement of emergency transport roads. Furthermore, we are continuing to receive orders from the national government and local governments in association with Japan's three-year emergency response plan for national resilience. SHO-BOND will continue to upgrade the ability to capture orders by carefully selecting projects for the effective utilization of our distinctive strengths and increasing number of our engineers. All of these activities have the goal of achieving sustained growth in order to meet the expectations of shareholders and investors.
We sincerely ask for your continued understanding and support as we take the actions needed to accomplish our goals.
President and Representative Director
SHO-BOND Holdings Co., Ltd.