Favorable business performance a chance to invest in manpower

The Yomiuri Shimbun High earnings should be directed to investment in human resources, such as a further increase in wages. It is time for companies to get out of their defensive management posture.

Announcements of mid-term settlements of accounts for the half year to September 2017 by companies listed on the Tokyo Stock Exchange have passed their peak.

The sales of those companies listed on the First Section of the TSE as a whole increased by 9 percent compared to the same term of the previous fiscal year, with their net profit up as much as 23 percent year-on-year. The total sum of their net profit is expected to reach a record high for the first time in two half-year periods. The number of companies that will revise upward their forecast earnings for the fiscal year ending in March 2018 has topped 300.

With the yen’s fall and the recovery in overseas economies as a tailwind, companies, mainly those in industries driven by foreign demand, such as electric appliance makers and automobile manufacturers, have been doing remarkably well.

Sony Corp., a leading electrical machinery maker, had a record high in operating profit for the first time in 20 years. The revival of Sony, which had been groaning under sluggish performance in the TV business, has been driven by an increase in sales of image sensors for smartphones and other products.

Nintendo Co., enjoying brisk sales of its new-type game machine, is forecast to quadruple its operating profit for the fiscal year ending in March 2018 compared to the same term of the previous fiscal year.

Such strategies as companies improving the technologies and products at which they excel have proved effective. Amid ever-fiercer global competition, concentrating management resources in areas of strength seems to be a promising course of action.

Their favorable earnings also have much to do with the external factor: the yen’s decline. There are many cases of positive earnings appearing to exceed the original competence of companies, as their profits earned overseas have been swollen in yen terms.

Govt must ease regulations

Toyota Motor Corp. is forecast to post a year-on-year increase in net profit in its settlement of accounts for the fiscal year ending in March 2018, but the boosting effect of the yen’s fall represents as much as ¥175 billion in its results. Should this special factor be removed, the automaker is said to post, in real terms, a year-on-year decline in net profit.

In order to put electric vehicles and self-driving cars to practical use, the auto industry faces a major technological innovation phase. It should be necessary for automakers to further boost their research and development framework, without missing the favorable opportunity presented by the weak yen.

Meanwhile, the business performance of domestic-demand oriented companies is strikingly sluggish. Due to increased labor costs needed to secure workers, Yamato Holdings Co. posted a net loss.

NTT Docomo Inc., a leading mobile phone carrier, also posted a year-on-year decline in operating profit. Isetan Mitsukoshi Holdings Ltd., a leading department store operator that expects to register a year-on-year drop in net profit for the fiscal year ending in March 2018, plans to make in the neighborhood of 1,000 additional job cuts by expanding its early retirement system.

In order to raise the level of the Japanese economy, steady efforts to enhance its potential growth power are essential.

Raising productivity through investment in plants and equipment to make factories more sophisticated. Promoting technological innovation by substantially fostering manpower through such steps as improved in-service training. Trying to make a broad wage hike by promoting nonregular workers to regular positions. By taking these measures, a virtuous cycle of investment and consumption should be brought about, using a favorable business performance as a starting point.

The administration led by Prime Minister Shinzo Abe is calling on the business world to implement a 3 percent wage hike. The government, for its part, also has to back up companies by easing regulations so that new enterprises can be created.

(From The Yomiuri Shimbun, Nov. 14, 2017) Speech


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