Firms wary of protectionism, oil despite record profits

Jiji Press TOKYO (Jiji Press) — After scoring record earnings in fiscal 2017, many Japanese companies are growing jittery about the course of the global economy mainly due to U.S. protectionist moves and higher crude oil prices.

For the year that ended in March, 272 nonfinancial companies listed on the Tokyo Stock Exchange’s First Section reported record group net profits by Thursday.

Their performance was jacked up by brisk sales, price hikes and positive effects of structural reforms.

“This is a result of our business structural reforms,” said Mitsuaki Nishiyama, senior vice president of Hitachi Ltd. The technology giant logged a record net profit for the first time in six years, reflecting efforts to trim sluggish operations such as logistics.

Net profit at electronics maker Sony Corp. surged more than six-fold from the previous year to ¥490 billion as a result of structural reforms.

Automaker Toyota Motor Corp. chalked up a net profit of ¥2.49 trillion, supported by brisk sales of fuel-efficient hybrid vehicles, the yen’s drop and U.S. corporate tax cuts. President Akio Toyoda said effects from cost cuts “are becoming evident.”

Shin-Etsu Chemical Co. enjoyed a record net profit for the first time in 10 years, mainly because the prices of vinyl chloride resin for pipes increased amid rising global infrastructure demand.

The wider use of the Internet of Things, or IoT, and artificial intelligence technologies buoyed semiconductor-related companies.

Net profit at chipmaking equipment producer Tokyo Electron Ltd. rewrote the record high marked the previous year, jumping by more than 70 percent.

The robust global economy also boosted earnings at nonmanufacturers. Airline operator ANA Holdings Inc. enjoyed a record profit for the third consecutive year, thanks to brisk demand for business trips and air cargo services.

Meanwhile, sales have slowed of U.S. tech titan Apple Inc.’s high-end iPhone models, which supported earnings at electronics and electronic parts manufacturers in Japan.

An official of Mitsubishi Electric Corp. said that orders for equipment to make organic electroluminescence panels used in high-end smartphones are getting sluggish.

For the current year through March 2019, many managers worry about a possible rise in the yen due to uncertainties over the international situation and the course of U.S. trade policies under President Donald Trump’s administration.

By Friday, 1,049, or more than 80 percent, of the 1,287 TSE First-Section nonfinancial firms that close the book in March published their fiscal 2017 earnings, according to a Jiji Press survey.

Their combined net profits are forecast to fall 1.6 percent in fiscal 2018 after a 25.2 percent rise in the previous year, with 349 companies braced for lower earnings, the survey also said.

Shigenobu Nagamori, president and chairman of motor maker Nidec Corp., warned that the dollar could fall below ¥100.

Following the recent U.S. decision to withdraw from the 2015 Iran nuclear deal, many companies expect crude oil prices to rise further.

Recent crude oil prices are 30 percent higher than the fiscal 2017 average. This “is an unignorable cost factor,” said Hiroaki Mino, senior strategist at Mizuho Securities Co.

Labor shortages are also among the issues facing Japanese companies.

Kenichi Shibasaki, senior managing executive officer of Yamato Holdings Co., said that the parcel delivery service group would not be able to continue business without improving its work environment.Speech

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