After-tax profits of Japanese companies listed on the first section of the Tokyo Stock Exchange plunged 70 percent from the previous year, marking the largest drop since the period immediately after World War II, according to financial reports announced Friday.
The huge drop in the April-September period was summed up by Kyodo News based on the midterm financial statements of 736 companies, or some 60 percent of the listed companies excluding the financial sector. The previous record was a 57 percent plunge posted in the preceding six-month period through March.
The dire results are attributable to deterioration in business performance amid the prolonged economic slump as well as to appraisal losses in stockholdings and extraordinary losses incurred by liquidating affiliated companies.
Pretax profits, a direct measure of business performance, also fell 30 percent from a year ago, the largest since the first half of 1975 when the economy suffered severely from the first oil shock.
For fiscal 1998, pretax profits are expected to post a 24 percent decrease in the second consecutive year of decline.
Latent profits in stockholdings and fixed assets had long served as a safety valve for companies, compensating for operating losses if any.
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