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ECONOMY

Japanese firms suffer profit fall as U.S.-China dispute weighs

  • May 17, 2019
  • , Kyodo News , 9:02 p.m.
  • English Press

TOKYO — The combined group net profit of major Japanese companies in the year to March fell 7.3 percent from a year earlier to 33.5 trillion yen ($305 billion) as the U.S.-China trade conflict and an economic slowdown in China hurt many manufacturers, data compiled by SMBC Nikko Securities Inc. showed Friday.

 

The decline in the consolidated group net profit of 1,461 companies listed on the Tokyo Stock Exchange’s First Section came after it rose to a record high 37.1 trillion yen the previous year.

 

An 8.4 percent increase for the current business year has been projected, but SMBC Nikko says concerns remain about the predicted profit recovery given that the United States raised tariffs on $200 billion worth of Chinese products from 10 percent to 25 percent and threatened to hike tariffs on the remaining goods after a large portion of those companies had already released their earnings guidance.

 

In a retaliatory move, China will raise duties on $60 billion worth of U.S. imports to a maximum of 25 percent from 10 percent next month.

 

Nikko SMBC’s data is based on companies which had reported their year to March results by Thursday.

 

“Many of the companies had not factored in the intensified U.S.-China dispute at the time of the release of their earnings reports,” said Hikaru Yasuda, equity strategist at SMBC Nikko Securities Inc.

 

“Companies exporting products, in particular, could be hit again if the trade row leads to a global economic slowdown or strengthening of the yen,” Yasuda said.

 

Manufacturers logged a 7.9 percent fall in net profit while nonmanufacturers’ bottom line, excluding financial institutions whose profits tend to fluctuate, improved 1.5 percent.

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