Japan Inc’s third-quarter profits fell at the sharpest rate since the 2011 Fukushima earthquake and tsunami as companies faced an abrupt slowdown in China’s…
Japan Inc’s third-quarter profits fell at the sharpest rate since the 2011 Fukushima earthquake and tsunami as companies faced an abrupt slowdown in China’s economy owing to the US trade dispute.
Following years of robust growth under Prime Minister Shinzo Abe’s pro-business economic policies, Japanese companies were also hit by global growth fears that have also affected technology giants such as Apple and Intel. A series of downgrades in annual profit forecasts by Nidec, Panasonic, Fanuc and other manufacturers were accompanied by warnings about the lack of clarity about when a recovery would happen.
“We think we hit a bottom during the October to December quarter. But the biggest problem is that we just cannot foresee the timing of a recovery,” said Yoshiharu Inaba, chief executive of industrial robot maker Fanuc, which lowered its guidance following a 42 per cent fall in quarterly operating profit.
According to SMBC Nikko Securities, 1,014 of companies in the benchmark Topix index reported third-quarter operating profit that was 2.6 per cent lower than the same quarter last year. That was the biggest percentage fall since the 2011-2012 fiscal year when the March 11 earthquake and tsunami disrupted supply chains worldwide, according to SMBC.
On a net profit basis, the decline was 26 per cent, mostly because the US tax windfall that Japanese companies had the previous year fell away.
Another factor in the fall in net profits was large write-offs at Toyota, Hitachi, Suruga Bank and Nomura. In Toyota’s case, Japan’s largest carmaker was hit by a big drop in the value of its ¥2.4tn ($22bn), 189 company-strong portfolio of shares held in other listed companies and a new method of accounting for the fall in share prices.
