Japan's biggest companies expect rising profits
TOKYO: In a sign that cost-cutting is paying dividends, Japan's publicly
traded companies expect to see their pretax profits rise, on average, for
the first time in three years, according to calculations published Saturday
by a business newspaper.
The 1,798 listed companies, according to the Nihon Keizai's calculations
based on the companies' own forecasts, should see overall pretax profits
increase by 10.7 percent in the fiscal year ending March 31, reversing a
20.5 percent slide the previous year.
Though the companies expect that sales will have fallen by an average of 4.1
percent, reflecting Japan's extended economic woes, pretax profits are
expected to increase in part because job cuts and other restructuring
efforts have lowered costs.
Still, the latest official forecast by the Japanese government calls for
gross domestic product - the total value of the nation's goods and
services - to grow only 0.6 percent in the fiscal year ending this month.
Economists say the world's second-largest economy won't make a full recovery
until recession-conscious Japanese consumers feel confident enough to
increase spending.
Japan has been slower than the United States and other industrialized
economies to embrace restructuring because employers here traditionally
promised their workers a job for life in return for their loyalty.
But the country's deepest economic slump in decades has forced an increasing
number of companies to cut their payrolls, typically by reducing the number
of new hires and encouraging early retirement.
Profitability in Japan has also gotten a boost from increasing investment in
computer networks and other information technology that improves
productivity, the newspaper said.
The largest profit upturns are forecast by the electronics and
precision-machinery industries, both heavy hitters in Japan's
export-oriented economy, which are expecting average profit increases of 47
percent and 33 percent, respectively, it said.(AP)
For reprint rights: Times Syndication Service
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