Kumagai Gumi (Hong Kong) has posted a 74 per cent decline in net profit to $121.5 million, largely because of the absence of earnings from property development in Hong Kong. The fall was also attributable to the slowdown in property sales in southern China and hotel operations in Beijing, it said. It expected to see an increase in profit and cash flow from its mainland commercial and residential properties in the second half. In the first half, turnover fell 32 per cent to $903 million. Operating profit margin fell sharply from 31 per cent to 12 per cent. Contributions from associated companies plunged to $700,000 from $109.3 million. Diluted earnings per share were 28.7 cents, down from 109 cents. The company decided against paying an interim dividend in light of the uncertain economic outlook. It said the construction business showed growth because of the completion of the airport terminal building project at Chek Lap Kok. Progress was made on projects under construction. This included Vista Paradiso residential development in Ma On Shan, scheduled for completion in January. The division had outstanding contracts worth about $8.6 billion as of June. The company said it would be cautious in new property investments after succeeding in selling its residential properties in Hong Kong before the market downturn. It said it would focus on its core business of construction. It planned to reduce debts to improve its balance sheet in order to capitalise on new investment opportunities.