Major nonfinancial companies are expected to report more than ¥700 billion in appraisal losses in securities on a consolidated basis for the October-December quarter, according to a survey by Credit Suisse Securities (Japan) Ltd.
The losses are compounding the companies' problems, as their profits have already been eroded by slumping core business due to reduced production and sluggish consumption.
Cross-shareholdings among the surveyed companies, listed on the first section of the Tokyo Stock Exchange, has exacerbated the losses in some cases, and companies may move to review their investment strategies.
According to the survey, more than 300 companies suffered appraisal losses in securities in October-December. Such losses only from stocks in domestic companies are expected to top ¥300 billion.
The companies were hit by falling stock prices as the Nikkei average fell to 7,162.90 in late October, hitting a 26-year closing low.
Nippon Steel Corp. has announced appraisal losses of ¥57.9 billion, while Sharp Corp. has released a figure of ¥43.2 billion.
Daiichi Sankyo Co. said last week it will report an extraordinary loss of ¥354 billion for the 2008 business year because Ranbaxy Laboratories Ltd.'s stock price has been more than halved since the drugmaker turned India's top pharmaceutical company into a subsidiary last year.
Including such losses involving stocks in foreign companies, total appraisal losses in securities are expected to amount to ¥700 billion, the survey showed.