• Kyodo

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The combined net profit of listed Japanese firms tumbled 53.7 percent in the April-June period from a year earlier to ¥4.68 trillion ($44 billion), hit by the coronavirus pandemic that has depressed global economic activity, data by a securities firm showed Friday.

A third of 33 sectors were in the red in the first quarter of fiscal 2020, and transport equipment was the biggest loser after auto sales plunged due to supply disruptions and more people staying away from dealerships. The air transport sector was pounded by travel curbs aimed at reducing the risk of coronavirus infection.

According to the tally by SMBC Nikko Securities Inc. covering 1,419 firms that had reported first-quarter earnings results by Thursday, 424 were in the red.

Although the tally is not yet final, SMBC Nikko Securities said the fall in combined net profit is already the largest since the 79.7 percent plunge registered in 2009 in the aftermath of the collapse of Lehman Brothers.

The pandemic is expected to have pushed the Japanese economy deeper into recession in April-June with a record contraction projected. During that quarter, people were asked to refrain from going out and businesses to temporarily shut. The business environment for Japanese firms will likely remain severe despite a view that the economy has hit bottom.

Some 97.1 percent of the companies listed on the first section of the Tokyo Stock Exchange in the current business year ending next March have released first-quarter earnings reports.

In the April-June period, major Japanese automakers such as Nissan Motor Co. and Honda Motor Co. reported losses, while Toyota Motor Corp. managed to avoid falling into the red despite a sharp fall in net profit from a year ago.

With year-on-year sales down 42.5 percent, the transport equipment sector that includes automakers saw a net loss of ¥730.8 billion, a reversal from the ¥1.12 trillion in profit a year earlier.

Among other sectors losing money, air transport registered ¥202.6 billion in net loss and land transport ¥432.7 billion.

ANA Holdings Inc. reported a record net loss of ¥108.82 billion as air travel demand slumped. The major Japanese air carrier is in talks with multiple banks to raise capital, likely via subordinated loans, sources familiar with the matter have said.

While the coronavirus has dealt a severe blow to many firms, the information and communications sector was a bright spot with a net profit of ¥2.24 trillion, up 5.1 percent from a year ago, benefiting from more people working from home. Solid demand also helped the electronics sector stay in the black.

Keiichi Ito, chief quantitative analyst at SMBC Nikko Securities, takes a cautious stance on the outlook for the next quarter.

“Coronavirus infections are expanding again globally so it’s not necessarily clear whether earnings will improve in the July-September period and later,” Ito said.

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