For many Japanese companies who are closing their fiscal year in March, there is a satisfying look at their bottom lines as these firms will be posting veritable earnings at home and in the global market. Most of these companies will point to the weaker yen as the main boost to profits, but a number of them also made significant cost-cutting efforts which helped in their profit figures for the year.
Of the 128 companies that will end their fiscal year in March, profits from the period of April to December were revealed as of Monday at around 2.4 trillion yen (estimated at US$23.19 billion). This total sees a significant 70% increase from the year before, and the record surpassed for the first time results from the last boom Japan experienced in 2007, just before the Asian financial crisis. One particular company is global automotive giant Toyota Motor Corp., who logged 1.29 trillion yen (around US$12.6 billion) in profit. Even taking the group of companies under the Toyota into consideration, it would still be a good 140% jump from the previous year. Toyota points to a very effective effort in streamlining, as well as the sharp decline of the yen and the profitability of exports, that account for the improvement in earnings.
At Yamaha, profit margins from musical instrument manufacture also expanded in terms of exports. In fact, for other major companies who are focused on exports, the profit levels from April-December 2013 period for the first time increased since the Asian financial slump. The next step in this improvement story should be that the profits would be felt at the level of the shareholders. Earnings are frequently used as basis not only for payouts to shareholders, but in many cases also used as the basis of wage negotiations with labor. The Japanese economy has been waiting so long for a positive cycle of pay increases, which will then push local spending.
[ via Nikkei ]
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