Business / Corporate

Major Japanese firms expected to report first annual drop in net profits in three years

JIJI

Japan’s major nonfinancial companies are expected to post lower consolidated net profits for the first time in three years for fiscal 2018 ending next month, a survey says.

The firms’ combined net profit is likely to fall 3.9 percent from the previous year due mainly to slowing economic growth in China amid trade tensions with the United States.

The survey, released Friday, covered 1,080 companies that announced April-December results the same day. They account for 83 percent of the nonfinancial companies listed on the first section of the Tokyo Stock Exchange.

Of the total, 149 firms, or 14 percent, revised down their net profit estimates for the year, compared with 95 companies that made upward revisions.

In particular, downward revisions were conspicuous in the electronics sector, which is struggling with China’s slowdown as well as weakening global smartphone demand.

Major companies enjoyed strong earnings in the first half ended in September, with a 10.7 percent increase in combined net profit from the year before. But earnings lost momentum quickly starting in autumn.

Their combined net profit tumbled 22.7 percent in the quarter ended in December compared with a year before.

Among them, Toyota Motor Corp. cut its net profit forecast by ¥430 billion due to share appraisal losses. Seasoning producer Ajinomoto Co. booked an impairment loss of ¥26.8 billion because of poor overseas business.

“Corporate earnings worsened more than expected and conditions will remain tough in the next business year,” said Hisao Matsuura, chief equity strategist at Nomura Securities Co.