• Bloomberg


Domestic machinery orders rose for a second month in June as companies increased spending to restore businesses and production lines disrupted by the March 11 quake and tsunami.

Factory orders, an indicator of capital spending three to six months in advance, rose 7.7 percent in June from May, the Cabinet Office said Thursday. The median forecast of 27 economists surveyed by Bloomberg News was for a 1.7 percent increase.

The report follows production and export data in recent months suggesting the corporate sector is recovering faster than expected from the March disaster. Still, the data cover the period before the yen climbed toward a postwar high that executives say may force companies to pare profit forecasts or move facilities overseas.

“Companies have been pretty optimistic about their spending plans and more people are confident that the postquake slump will be short-lived,” Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute in Tokyo, said before the report. “Demand to restore factories damaged by the disaster is also a significant factor supporting demand.”

Toshiba Corp., the world’s largest maker of flash memory chips, is among companies counting on reconstruction demand to boost business later this year. The company posted ¥470 million ($6 million) in net income in the three months that ended June 30, exceeding analysts’ estimates.

Fumio Muraoka, corporate senior executive vice president at Toshiba, told reporters May 9 that the company expects to benefit from demand for televisions, refrigerators and air conditioners in the current fiscal year as the nation rebuilds.

The yen has climbed more than 4 percent against the dollar in the past month and Wednesday breached the 76.97 per dollar level it strengthened to on Aug. 4 when authorities intervened. It is also stronger than the 82.59 average rate companies have based their profit forecasts on, in a quarterly Bank of Japan survey of business activity.

“The exchange rate is at a level that has an extremely damaging effect on the Japanese economy,” Osamu Masuko, president of Tokyo-based Mitsubishi Motors Corp., said last week.

Industrial production has risen for three straight months since plunging in March and companies forecast they will boost output this month as well to make up for lost capacity resulting from the earthquake and tsunami. The nation’s largest firms expect to increase spending 4.2 percent in the year ending next March, according to the central bank’s “tankan” business sentiment survey.

Nikon boosts forecasts


Nikon Corp. has raised its earnings forecasts for the year ending next March thanks to its earlier-than-expected recovery from supply-chain disruptions caused by the March 11 disaster.

The optical instrument maker now expects group sales of ¥990 billion for fiscal 2011, instead of ¥940 billion projected earlier, and an operating profit of ¥86 billion, versus ¥68 billion. Projected net profit stands at ¥60 billion, against ¥42 billion expected before.

The company also has upgraded its April-September earnings projection and plans to pay an annual dividend of ¥34 per share, up from ¥27.

Although the supply-chain paralysis was initially anticipated to continue into the autumn, it was resolved almost completely by the end of April after Nikon shifted its parts-procurement sources, it said. Brisk sales of digital cameras and steppers for production of chips and liquid crystal displays also lent support to the upward revisions.

For the year, Nikon expects its annual sales of digital cameras — both single-lens reflex and compact cameras combined — to hit a record high of 20.9 million units, led by China and other Asian markets.

For the April-June quarter, the company reported an operating profit of ¥36.920 billion, up 3.3-fold from a year before, and a net profit of ¥30.682 billion, up 3.7-fold, on sales of ¥245.567 billion, up 19.7 percent.

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