2024-02-11 11:58:43
Strong profits for major Japanese companies with expectations of higher wages
Many major Japanese companies listed on the stock exchange reported strong profits during the period from April to December last year, which may lead to higher wages due to increased productivity.
The financial results showed that the final net profits of these companies increased significantly, mainly due to the rise in prices in various sectors, according to the Japanese “Jiji Press” news agency.
High corporate profits
Among the 786 companies that make up the Topix index of Japanese stocks that announced their results in the period from April to last December until Wednesday, 455 companies, or about 60 percent of the total companies, announced an increase in their net profits on an annual basis, according to the company. SMBC Nikko Securities.
The number of companies that raised their net profit expectations for the entire fiscal year that ends next month exceeded the number of companies that lowered estimates, reaching 154 companies compared to 78 companies.
Hikaru Yasuda, chief equity strategist at SMBC Nikko Securities, said: “The total annual net profit of Topix companies is expected to reach a new record high. The earnings recovery that began the previous year continues.”
Recovery leaders
The industry sector, including automakers and machinery manufacturers, led the recovery as net profits of 364 companies combined rose by about 20 percent in the April-December period compared to the previous year.
In particular, global manufacturing companies achieved strong increases in profits supported by the strong US economy.
Toyota Motor Corp. achieved operating and net profits that reached their highest levels ever for a Japanese company. Its annual net profit is expected to exceed 4 trillion yen for the first time in the country’s history.
Other contributing factors
Japanese companies also benefited from higher interest rates abroad and lower commodity prices. The net profit of Mitsubishi UFJ Financial Group Limited and two other major banking groups jumped by 65.4 percent due to the increase in lending margin.
Kansai Electric Power and seven other major energy supply companies also achieved record net profits thanks to increases in electricity prices and stable liquefied natural gas prices.
Airlines and railway operating companies also witnessed an increase in profits due to the recovery in travel demand after the lifting of “Covid-19” restrictions. Japan Airlines Chief Financial Officer Yuji Saito said: “We achieved higher profits than in 2019, before the pandemic.”
Effects on wages
Higher profits may lead to higher wages. “Part of the improved profits is due to improved productivity, and the results should be reflected in wages to some extent,” said Mitsubishi Heavy Industries Co., Ltd.’s chief financial officer, Hisato Kozawa.
Mizuho Financial Group Limited, which recorded an increase in net profit by about 2 percent, aims to raise wages by about 7 percent.
“Wages should be raised by at least 5 percent on average despite the weak financial performance,” said Hideo Tanimoto, president of Kyocera Corp., which cut its annual net profit forecast due to weak demand for semiconductors.
Corporate profits have continued to grow, paving the way for companies to spend more on employees, according to Takahisa Odaka, chief strategist at Nomura Securities. He added: “The decision to raise wages is not up to the employer.”
Some believe that even small companies have room to raise wages. Large companies are increasingly agreeing to allow small suppliers to shift higher costs to them, which helps improve the financial situation of small companies, according to an official at a foreign fund management company.
The fragile Chinese economy is beginning to affect Japanese companies, especially manufacturers. Motor Nike Corp cut its annual net profit forecast due to falling prices for electric vehicles in China, while Asahi Kasei Corp, a chemical maker, partly blamed weak demand there for its lower operating profits.
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