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Economy

Listed Japanese companies' profits bottoming out

First growth in six quarters comes under cloud of concern over US protectionism

A Tokyo Electron group factory in Miyagi Prefecture, Japan. The manufacturer has enjoyed brisk demand for chipmaking equipment.

TOKYO -- Earnings at publicly traded Japanese enterprises showed signs of improvement last quarter, rising on the year for the first time since the April to June of 2015 as stronger North American and Chinese showings buoyed such export-heavy businesses as chipmakers.

Aggregate net profit at businesses releasing October-December earnings through Tuesday climbed 31%, a Nikkei Inc. survey shows. The tally includes 458 nonfinancial companies, accounting for 30% of total market capitalization.

Japanese companies outperformed those in the U.S. and Europe, where aggregate quarterly net profit increased 7% and 13%, according to Thomson Reuters. The yen averaged in the mid-109 range against the dollar last quarter, about 12 yen stronger than a year earlier. Yet profits rose nonetheless thanks to broader-based growth driven by economic expansion in North America and recovering smartphone demand in China.

Makers of silicon wafers for chip production were among last quarter's winners.

Net profit surged 270% in the chemical industry. Shin-Etsu Chemical, which logged 20% growth on an improving supply-demand balance for wafers to make automotive and smartphone chips, raised 300mm-wafer prices substantially for the first time in 11 years this January. Fujifilm Holdings enjoyed strong sales of Instax instant cameras as well as semiconductor materials.

Tokyo Electron benefited from rising demand for chipmaking equipment in North America and Asia to feed a swelling appetite for data transmissions. "Our customers are investing actively, so the large influx of orders will likely continue," President Toshiki Kawai said.

Nonferrous-metal companies' aggregate profit jumped more than 50% amid a commodities rally. In more domestic-demand-oriented areas, profit rose 10% in the rail industry, while the real estate and construction sectors each saw 40% gains on brisk office demand. But profit slumped in ground shipping, where a labor shortage has driven up personnel costs.

Aggregate full-year net profit for companies closing their books in March -- excluding Toshiba, expected to book a massive loss on U.S. nuclear operations -- is forecast to rise 9%. This would mark a significant improvement over the roughly 10% decline in the first half of the fiscal year, which owed partly to the yen's strength.

But corporate chiefs are nervous -- not least about the new U.S. government under President Donald Trump, whose policies could do much to alter the business environment. "It's not clear how long the yen's current weakness will last," warned Kunio Nozaki, a senior managing executive officer at Sumitomo Chemical.

Companies' forecasts currently assume 110 yen to the dollar on average, stronger than current levels. A weaker Japanese currency benefits exporters by boosting the value of foreign sales in yen terms but hurts such businesses as restaurant operators and oil companies by driving up import costs.

(Nikkei)

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