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Corporate earnings mostly remain solid in April-June

Jiji PressTOKYO (Jiji Press) — Earnings at Japanese companies remained solid in April-June on the back of the expanding global economy, with many manufacturers posting growth in both sales and profits.

But some companies saw deterioration in earnings due to higher fuel and materials costs.

In addition, worries are prevailing over the course of trade issues stemming from the protectionist policy of U.S. President Donald Trump.

According to a Jiji Press tally of 898 companies, or 69.1 percent, of all listed on the Tokyo Stock Exchange’s First Section, excluding financial institutions, combined consolidated net profits increased 10.6 percent from a year before.

Boosted by brisk game operations, Sony Corp.’s net profit jumped 2.8-fold from a year before, posting a record net profit for the first time in three years.

Hiroki Totoki, chief financial officer of Sony, told a press conference at the end of July that the electronics maker got off to a “reasonable start” to the current fiscal year.

At machinery giant Hitachi Ltd., net profit surged 40 percent, hitting a record high for the second consecutive year.

Hitachi Senior Vice President and Executive Officer Mitsuaki Nishiyama said that most of the company’s divisions enjoyed profit growth. “Results of structural reforms are appearing,” Nishiyama said.

Toyota Motor Corp. saw its net profit grow 7.2 percent to a record high of ¥657.3 billion, helped by sales growth in Asia and Europe, as well as a cost reduction.

Masayoshi Shirayanagi, senior managing officer of Toyota, said, “Results of efforts on [boosting] earning power and cutting costs are coming out little by little.”

Demand continues to increase for semiconductors for use including in the Internet of Things, artificial intelligence and autonomous driving.

Net profit at semiconductor-manufacturing equipment maker Tokyo Electron Ltd. rose 35.1 percent to a record high of ¥55.7 billion.

Tokyo Electron President Toshiki Kawai said the company expects investment in chipmaking equipment this year to grow 10 percent to 15 percent from the previous year.

By contrast, increased fuel costs stemming from a rise in crude oil prices forced three major shipping companies, including Nippon Yusen K.K., to suffer net losses. Japan Airlines and ANA Holdings Inc. reported profit falls.

Zensho Holdings Co., the operator of the Sukiya chain of “gyudon” beef-on-rice bowl restaurants, saw a net profit decline of 33.7 percent due to higher labor costs amid a personnel shortage.

The yen moved weaker than expected, but many companies did not revise up their earnings estimates for the current fiscal year through March 2019 due to strong worries about the outlook for trade issues.

Speaking on the U.S.-China trade friction, Takakazu Uchida, executive managing officer of trading house Mitsui & Co., said, “We need to pay attention to a possible deceleration in the global economy because of worsening in business sentiment and slowdown in consumption.”

Companies are also closely watching planned U.S. tariffs on imported automobiles and auto parts under the Trump administration.

Toyota estimated that the possible tariffs would add about ¥670,000 to the cost of each of its vehicles.

Katsuhiro Miyamoto, executive vice president of Nippon Steel & Sumitomo Metal Corp., said the auto tariffs are expected to have substantial effects on other sectors.Speech

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