May 1, 2014 2:00 am JST

Japan Inc.'s fiscal 2013 profit seen surging 30%

TOKYO -- The aggregate pretax profit of listed Japanese companies is on track to jump by just over 30% for the year ended March 31, boosted by the strength of manufacturers such as carmakers and electronics companies.

     By Wednesday, a peak day for announcements, earnings had been released for Japanese companies representing 30% of total market capitalization. Their combined pretax profit surged 50% last fiscal year.

     Once the rest of the companies officially announce earnings, combined profit will likely jump by about 32%.

     The total profit of 1,474 companies for which continuous comparisons are possible, excluding the financial sector, is expected to come to just over 28 trillion yen ($270 billion).

     The sum had fallen to just under 12 trillion yen after the financial crisis, but companies have now recovered more than 90% of the fiscal 2007 level, which marked an all-time high at 31 trillion yen, thanks in part to reforms and a boost from the softer yen.

     Early in fiscal 2013, collective forecasts saw combined profit rising 24%, but that margin of increase grew wider heading toward the end of the fiscal year.

     The overall profit increase was driven by manufacturers. Combined profit leapt 77% for those that have already announced earnings.

     Japanese automobile sales increased globally, thanks to high international competitiveness. Mazda Motor Corp. saw strong sales for its cars with proprietary environmental technologies. Mitsubishi Motors Corp. generated a record profit, on the back of brisk sales of plug-in hybrid vehicles.

     The strength of electronics makers, which are benefiting from an increase in demand for parts used in smartphones and automobiles, also stands out.

     For Nidec Corp., "motors for use in vehicles and industrial purposes were a driver of growth," says President Shigenobu Nagamori.

     Some domestic-demand-oriented companies also showed solid results. Helped by an uptick in foreign tourists, East Japan Railway Co. marked a record for rail transportation volume. Leading mobile carrier KDDI Corp. logged an all-time-high profit, lifted by increasing revenue from usage fees related to smartphones.

     All told, 80% of firms with earnings out by Wednesday reported higher pretax profits, while 20%, including NTT Docomo Inc., registered declines.

     This fiscal year, Japan Inc. will no longer get the same boost from a weaker yen and faces a decline in consumer demand in the wake of the April 1 consumption tax hike. Some firms like autoparts maker Denso Corp. foresee lower profits.

     Overall, however, Japanese companies expect higher profits. Forecasts available by Wednesday put aggregate profit growth at 3%.

(Nikkei)