October 31, 2017 6:00 pm JST  (Updated November 1, 2017 3:09 am JST)

First half shows broad gains for corporate Japan

Profit rises for more than two-thirds of companies on strong global economy

MASAMICHI HOSHI, Nikkei staff writer

Sony Executive Deputy President and Chief Financial Officer Kenichiro Yoshida announces the company's 2Q results.

TOKYO -- Corporate Japan enjoyed a fruitful April-September half, with 71% of listed companies reporting an increase in net profit for the period, according to Nikkei Inc.'s tabulation of interim results released through Tuesday.

That marks the highest proportion of gainers in four years and the best result since the same period of 2013 -- just when Prime Minister Shinzo Abe's economic stimulus package, or Abenomics, was getting underway. The figure was lifted by exporters such as electronics and machinery manufacturers, whose results were helped by a cheaper yen and a robust global economy.

The Nikkei aggregated the results of 501 nonfinancial companies reported by Tuesday, accounting for 32% of businesses whose fiscal years end in March and 40% of this group's total market capitalization.

Aggregate net profit at these companies grew 49%, the first rise in two years. The U.S. dollar averaged around 111 yen during the half, compared with 105 yen a year before. The weaker currency pushed up exporters' revenues and profits.

Sony reported Tuesday a net profit of 211.7 billion yen ($1.86 billion) for the half through September, eight times the figure from the same period last year and its first record high for the half in a decade. "The demand for semiconductors and television sets surpassed our expectations," said Executive Deputy President Kenichiro Yoshida. Brisk sales of image sensors contributed as well.

Japan Airlines enjoyed a 9% year-on-year net profit increase to 77.9 billion yen, with the favorable global economy spurring travel and transport.

Infrastructure and capital spending also started to pick up. This helped Mitsubishi Electric post a record net profit of 131.1 billion yen, a 48% increase.

Tech tailwinds

Though this strong performance owes generally to a solid global economy, three factors played particularly significant roles. One is worldwide demand for chips as the expanding "internet of things" pushes demand for memory at data centers and elsewhere.

Shin-Etsu Chemical's net profit for the half climbed 27% to an all-time high of 110.7 billion yen. The supply-demand balance for silicon wafers used in chip production "has been extremely tight since January, and it got even tighter after summer," Senior Managing Director Masahiko Todoroki said.

Chipmaking equipment manufacturer Tokyo Electron's net profit more than doubled to its first record high in 10 years. Chief Financial Officer Ryo Hirooka of Hoya, a technology company whose products include mask blanks used in chip production, even warned that the current boom might be overdone.

Another boost came from increased investment in factory automation. Expansion by the manufacturing sector has tightened labor markets in many countries.

Fanuc upgraded its fiscal 2017 earnings forecast after first-half net profit jumped 43% on robust demand for industrial robots. Though orders typically drop off in the second half, "automation demand is unusually strong," Chairman and CEO Yoshiharu Inaba noted. "We haven't seen a slump this year."

Short-handed companies are increasingly seeing a need to reform their work methods, creating business opportunities for providers of support systems. One such enterprise, Obic, saw net profit rise 19% in the first half. President Shoichi Tachibana anticipates growing demand for efficiency-boosting systems.

Contrasting fortunes

Recovering commodity prices have buoyed earnings at many companies as well. Komatsu's net profit surged 171% thanks to growth in mining equipment. "We've reached a good position, particularly in China and Southeast Asia," Executive Vice President Mikio Fujitsuka said.

The rally has also benefited shipping companies such as Mitsui O.S.K. Lines, whose pretax profit tripled in the first half. "Shipping rates are on a recovery track," director Takashi Maruyama said, noting brisk coal shipments to China.

On the other hand, sluggish results were reported by companies that rely on domestic demand, with fiercer competition and labor shortages among the main headwinds. NTT Docomo's net profit declined for the half the first time in three years. The wireless carrier rolled out cheap plans to attract customers tempted by cut-rate smartphones elsewhere, eating into revenue and piling on costs.

Delivery service provider Yamato Holdings reported a net loss of 12 billion yen, unlike last year when it recorded a net profit for the same period. Revenue rose by 3%, but "outsourcing costs surged," senior managing director Kenichi Shibasaki explained.

The labor shortage has made it more expensive for Maruwa Unyu Kikan to secure new drivers as well. Operating profit sank for the first time in three years at the logistics company, whose operations include business-to-business shipping.

Spreading the benefits of the economic recovery to a broader base of companies will be key to sustainable growth.

Nikkei staff writer Masayuki Yuda contributed to this article.

 

Sony Corp.

Japan

Market(Ticker): TKS(6758)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 58,605.29M
Shares: 1,264.64M

Japan Airlines Co., Ltd.

Japan

Market(Ticker): TKS(9201)
Sector:
Industry:
Transportation
Airlines
Market cap(USD): 12,638.65M
Shares: 353.71M

Mitsubishi Electric Corp.

Japan

Market(Ticker): TKS(6503)
Sector:
Industry:
Electronic Technology
Electronic Equipment/Instruments
Market cap(USD): 35,632.46M
Shares: 2,147.20M

Yamato Holdings Co., Ltd.

Japan

Market(Ticker): TKS(9064)
Sector:
Industry:
Transportation
Air Freight/Couriers
Market cap(USD): 7,637.57M
Shares: 411.33M

Shin-Etsu Chemical Co., Ltd.

Japan

Market(Ticker): TKS(4063)
Sector:
Industry:
Process Industries
Chemicals: Specialty
Market cap(USD): 47,459.35M
Shares: 432.10M

Tokyo Electron Ltd.

Japan

Market(Ticker): TKS(8035)
Sector:
Industry:
Electronic Technology
Electronic Production Equipment
Market cap(USD): 34,008.18M
Shares: 165.21M

HOYA Corp.

Japan

Market(Ticker): TKS(7741)
Sector:
Industry:
Health Technology
Medical Specialties
Market cap(USD): 20,196.01M
Shares: 385.73M

FANUC Corp.

Japan

Market(Ticker): TKS(6954)
Sector:
Industry:
Producer Manufacturing
Industrial Machinery
Market cap(USD): 49,974.38M
Shares: 204.05M

OBIC Co., Ltd.

Japan

Market(Ticker): TKS(4684)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 6,646.78M
Shares: 99.59M

Komatsu Ltd.

Japan

Market(Ticker): TKS(6301)
Sector:
Industry:
Producer Manufacturing
Trucks/Construction/Farm Machinery
Market cap(USD): 31,153.75M
Shares: 971.96M

Mitsui O.S.K. Lines, Ltd.

Japan

Market(Ticker): TKS(9104)
Sector:
Industry:
Transportation
Marine Shipping
Market cap(USD): 3,816.03M
Shares: 120.62M

NTT DoCoMo, Inc.

Japan

Market(Ticker): TKS(9437)
Sector:
Industry:
Communications
Wireless Telecommunications
Market cap(USD): 96,904.33M
Shares: 3,899.56M

Maruwa Unyu Kikan Co. Ltd.

Japan

Market(Ticker): TKS(9090)
Sector:
Industry:
Transportation
Other Transportation
Market cap(USD): 696.97M
Shares: 32.09M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.