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TOKYO (Jiji Press) — Major Japanese firms are posting brisk earnings for April-June in the ongoing quarterly reporting season, on the back of rising leisure demand following the lifting of COVID-19 activity restrictions and thanks to an easing of semiconductor shortages.
A survey by SMBC Nikko Securities Inc. of April-June reports from companies in the TOPIX index of the Tokyo Stock Exchange has suggested a year-on-year increase of around 20% in their net profits.
Meanwhile, a slowdown in the Chinese economy is casting a shadow over the outlook for the manufacturing sector in particular.
In the first quarter of fiscal 2023, Toyota Motor Corp.’s consolidated operating profit surged 93.7% from a year before to ¥1,120.9 billion, supported by the yen’s weakening and price revisions while production rebounded as chip shortages eased.
Toyota was said to be the first Japanese company to achieve a quarterly operating profit of over ¥1 trillion. Chief Communication Officer Jun Nagata attributed the achievement to “improved product competitiveness, as well as measures to cope with the semiconductor shortage and the COVID-19 pandemic.”
Strong earnings are spilling over to auto parts makers. Motor maker Nidec Corp. logged a record April-June net profit, and its auto parts business achieved an operating profit.
“We will expand our earnings exponentially,” Nidec Chairman Shigenobu Nagamori said at a press conference.
Earnings at power companies are rapidly recovering after being hit hard by soaring fuel prices amid Russia’s invasion of Ukraine, as their profitability is improving on a pullback in fuel prices and electricity rate hikes.
Brokerage firms are enjoying sharp profit increases on higher commission revenues thanks to the buoyant Japanese stock market.
“Japan-related operations, mainly in the sales division, were strong,” said Takumi Kitamura, chief financial officer at Nomura Holdings Inc.
Leisure demand rebounding
Kimihiro Nakahori, chief financial officer of airline group ANA Holdings Inc., said that domestic leisure demand is rebounding above levels before the COVID-19 pandemic.
The parent company of All Nippon Airways reported its first April-June operating profit in four years. Along with rival Japan Airlines Co., the company is seeing earnings clearly improve as international passenger traffic is rebounding following the removal of COVID-19 border controls.
Tokyo Disney Resort operator Oriental Land Co. posted a record net profit of ¥27.4 billion, up 2.3-fold from a year before.
“The number of visitors from overseas has increased considerably,” a company official said.
Department store operator Isetan Mitsukoshi Holdings Ltd. saw both sales and profits increase thanks to a jump in demand from foreign visitors in the past few months.
China economy posing risks
On the other hand, general trading houses logged profit declines as commodity prices fell back. Mitsubishi Corp.’s net profit plunged 40%.
Home electronics retailer Yamada Holdings Co. reported lower quarterly sales and profits as its home appliance division is “struggling significantly” after demand linked to people staying home during the pandemic waned, according to executive officer Koichi Kiyomura.
Reflecting a slowdown in the Chinese economy, steelmaker JFE Holdings Inc. revised down its earnings forecasts for the year through March.
“The Chinese market has yet to recover,” JFE Executive Vice President Masashi Terahata said. “It may be delayed until early next year.”
“Business sentiment is worse than initially expected,” said Hirokazu Umeda, executive vice president of Panasonic Holdings Corp.
