• Kyodo

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Twenty-six of 33 sectors in Japan saw profit growth or a return to profitability in the April-September period from the previous year, a tally showed Monday, as both manufacturers and nonmanufacturers are recovering from the fallout of the coronavirus pandemic.

Based on earnings results released by listed Japanese companies on the First Section of the Tokyo Stock Exchange, the manufacturing industry as a whole saw net profit increase by about 2.6 times from a year earlier to ¥8.1 trillion ($71.4 billion), according to SMBC Nikko Securities Inc., which compiled the data.

Among the coronavirus-hit sectors, land and air transport continued to face headwinds. Despite seeing net losses narrow, the outlook remains uncertain as the travel demand has yet to recover.

SMBC Nikko Securities compiled earnings results released as of Friday by 783 companies on the First Section reporting results for the year ending March.

The total net profit of the nonmanufacturers for the first half of the year increased by about 2.6 times to ¥4.7 trillion, the data showed.

Transport equipment, including automakers, a key driver of the economy, and electronics secured a net profit of over ¥2 trillion. However, the situation for the auto industry was not as bright, partly due to the impact of production cutbacks.

Iron and steel, boosted by steel price hikes, and textiles swung back into the black, according to the data.

In the wholesale sector, where major trading companies performed well on the back of higher resources prices, net profit tripled, while the shipping sector, where container freight rates remained high, posted a more than fourteenfold increase, supporting the overall growth.

The first-half earnings results saw many major companies revise upward their earnings forecasts for the fiscal year ending March next year.

"The increase in costs due to the higher resources prices has been offset by higher product prices," Hikaru Yasuda, an equity strategist at SMBC Nikko Securities, said. "The cost-cutting measures taken after the COVID-19 pandemic have also contributed to limiting the deterioration in earnings."

However, compared to the total net profit of the manufacturers for the April-June period of 2021, the July-September period saw a 12.2% decline due to a reduction in output caused by a shortage of semiconductors.

Honda Motor Co. revised downward its earnings forecast for its business year through March, highlighting a lull in the recovery trend, especially in the automotive sector.

Land and air transport posted losses of about ¥170 billion and ¥200 billion, respectively, due to people refraining from business travel and other factors. Although both sectors are showing signs of a recovery in sales, a full-fledged recovery will still take some time, the data showed.

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