The combined pretax profit of companies listed on the Tokyo Stock Exchange’s first section shrank 7.0 percent in April-June from the same quarter last year, according to SMBC Nikko Securities Inc.
The total came to ¥5.08 trillion, the brokerage said Tuesday.
The yen’s continued strength against other major currencies and the global slowdown underpinned by the eurozone debt crisis hit the Japanese manufacturing sector, which has a high overseas sales ratio.
SMBC Nikko compiled the data from earnings reports released through Friday by 1,172 nonfinancial companies whose fiscal year runs from April to March.
Pretax profit fell 2.9 percent in the manufacturing sector. Electrical appliance makers suffered a sharp 50.4 percent drop amid sluggish worldwide sales of TVs and intensified competition from foreign makers, particularly in South Korea.
In contrast, manufacturers of transport equipment, including carmakers such as Toyota Motor Corp. and Honda Motor Co., saw their pretax profit jump about 4.6 times as production recovered from the dropoff caused by the March 2011 earthquake and tsunami.
Nonmanufacturers registered an 11.1 percent decrease as electricity suppliers were hit by rising fuel costs for thermal power generation to offset the nuclear plant shutdown.
For the year to next March, combined pretax profit is expected to rise about 17 percent to ¥25.03 trillion, SMBC Nikko said, adding that uncertainties remain over the yen’s movements and the eurozone debt issue.
“Depending on those risk factors, there may be many companies that will revise their earnings estimates downward,” said Kayoko Ota, a quantitative analyst at SMBC Nikko.
Life insurers down
The four biggest life insurers in the country logged double-digit falls in basic profit in the first quarter of fiscal 2012 because of falling stock prices and other unfavorable market conditions, according to their latest reports.
Compared with the April-June quarter last year, basic profit — the total of premium revenues and returns on invested premiums minus insurance payouts and operating expenses, such as wages — plunged 48.8 percent to ¥39.9 billion at Dai-ichi Life Co. and 55.8 percent to ¥33.3 billion at Sumitomo Life Insurance Co.
The declines were blamed on lower stock prices, which forced insurers to set aside more policy reserves for variable annuities.
Of the other two firms, Nippon Life Insurance Co. saw its basic profit sink 11.3 percent to ¥114.2 billion and Meiji Yasuda Life Insurance Co.’s fell 15.0 percent to ¥74.0 billion.
Reflecting low interest rates, weak returns on investment were also blamed for the profit contraction.
Nippon Life reported a premium revenue drop of 1.4 percent to ¥1.34 trillion, while Meiji Yasuda suffered a fall of 4.8 percent to ¥1.03 trillion, both on slow sales of lump-sum whole-life insurance sold through banks, marking a decline from brisk sales the previous year.
Dai-ichi Life booked a 7.0 percent gain in premium revenues to ¥854.9 billion on increased sales of whole-life insurance with term insurance riders, while Sumitomo boosted revenue by 28.3 percent to ¥741.6 billion thanks to strong sales of lump-sum whole-life insurance through banks.