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Sunday, 10 March, 2002, 09:52 GMT
Company profits 'plunge' in Japan
Tokyo: Lights are on, but profitability is too rarely at home
Japanese manufacturing, telecoms and technology firms are to report profits down by almost three quarters, a report has said.

The earnings of all listed Japanese companies outside the financial sector will be 72% lower in the current fiscal year than it was in the last, the Nihon Keizai Shimbun newspaper said.

"Listed firms will see both sales and profits decline for the first time in three years," the paper said, after a survey of 1,643 firms.

"Group pre-tax profits will be halved."

The report adds further weight to concerns over the health of Japan's economy, which official data on Friday showed shrank during the last nine months of 2001.

But the Nihon Keizai Shimbun forecast a brighter outlook for Japanese firms, forecast a recovery of up to 350% in profits in the next fiscal year, which starts next month.

Winners and losers

Falling demand for IT products would see Japan's electronics makers among the worst performers this year, the Nihon Keizai Shimbun said.

Sector giants including Hitachi, Fujitsu and NEC, firms which once powered Japan's development as a world economic power, are set to report losses for this financial year.

Telecoms firms would also see reduced earnings, with sector giant NTT expected to record a net loss of 300bn yen ($2.3bn).

But while manufacturers overall would see profits shrink by 80%, a weak yen and resilient demand for cars have underpinned the auto sector,

"The automobile sector will likely see a net profit of 1,400bn yen, up 130%," said the newspaper, which forecast pre-tax profits of more than 1,000bn for Toyota alone.

Shake-ups bear fruit

The recovery in corporate profits from April would come as firms saw the gains of recent shake-ups which have seen the loss of thousands of jobs.

"While automakers will likely continue turning in a strong performance, electronics makers expect to see higher profits thanks to a fall in restructuring outlays," the newspaper said.

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See also:

08 Mar 02 | Business
Japan's recession drags on
05 Mar 02 | Business
Japan pledges economy boost
04 Mar 02 | Business
Tokyo shares hit six-month high
27 Feb 02 | Business
Nikkei soars ahead of deflation plan
19 Feb 02 | Business
Reform fears hit Tokyo markets
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