Recent corporate performance has been good overall, but concern about future prospects is growing. Investment that will contribute to growth should be continued.
Announcements of mid-term settlements of accounts for the half year to September 2018 by companies listed on the Tokyo Stock Exchange are almost completed.
The sales of companies listed on the First Section of the TSE as a whole, excluding financial companies, increased by 4 percent compared to the same period in the previous fiscal year, with their net profit up 11 percent year-on-year. Against the backdrop of firm overseas economies and the depreciation of the yen, the total sum of their net profit is expected to exceed 16 trillion yen, a new record high.
Toyota Motor Corp. has posted record high net sales for the mid-term account, thanks to higher sales to emerging economies. Sony Corp. was bolstered by its mainstay business operations of game and network services and music, and Honda Motor Co. enjoyed strong sales of its motorcycles in Asia, leading both to see record profits.
It should be considered good news that companies, led by such key industries of Japan as electric machinery and automobiles, posted positive earnings one after another.
Kyocera Corp. and Nidec Corp., both leading electronic parts manufacturers, saw marked growth in the sales of their products for automobiles. Their identification of areas with potential growth and making bold investments there have proved effective.
Return profits to workers
It is worrisome that more companies have become wary about their performance in the coming months.
While a total of 219 companies have revised their projected net profit upward for the fiscal year ending in March 2019, as many as 225 revised their outlook downward.
The biggest reason is the ever-escalating trade friction between the United States and China.
Hitachi, Ltd., which posted a record profit for its mid-term account settlement, has kept its net profit forecast for the fiscal year ending in March 2019 unchanged from its earlier projection, on the grounds that it has yet to gauge the impact of the U.S.-China conflict.
Trends indicating a slowdown in China's economy are also becoming apparent. Mazda Motor Corp. saw its mid-term automobile sales in China fall short of those posted in the same period of the previous fiscal year. Fanuc Corp., a manufacturer of machine tools, saw the value of its orders in China during the July-September period nearly halve from the April-June period.
It is highly likely that U.S. protectionist policy will continue for the time being. Toyota is prepared to beef up its automobile production in the United States. Each company needs to work out a strategy, assuming a deterioration in the situation.
For companies with poor performance, the "selection and concentration" of corporate resources is essential. Isetan Mitsukoshi Holdings Ltd. will allocate funds raised through restructuring for opening new stores and making system investment.
If companies fail to conduct the research and investment needed for them to prepare for future developments, or capital investment that serves as the foundation for increasing their earnings, they won't be able to chart a future course for sustainable growth. Companies are required to make appropriate corporate judgments. It is also important for companies with enough money to return some of their profits to their employees by raising wages.
It is also important to implement measures such as regulatory reforms that promote entry into new business fields, so as to encourage highly motivated companies. The government should steadily advance its growth strategy.
(From The Yomiuri Shimbun, Nov. 20, 2018)
Read more from The Japan News at https://japannews.yomiuri.co.jp/
