Japan firms' net profit in Jan.-March falls 41.3% on cost hikes

The total net profit of listed companies in Japan dropped 41.3 percent to 4.94 trillion yen ($38.34 billion) in the January to March period from the previous quarter, reflecting the surge in raw material costs prompted by the Ukraine crisis, according to a recent tally by a securities firm.

Even excluding SoftBank Group Corp., an investment giant that reported a record net loss Thursday, the companies saw a 16.0 percent fall in combined net profit in the first quarter, show data from SMBC Nikko Securities Inc.

In the year that ended in March, overall net profit rose 31.8 percent to 28.53 trillion yen due to the yen's depreciation against the U.S. dollar.

A weaker yen boosts exporters' profits earned overseas when repatriated.

The data covered 891 listed firms, or about 60 percent of the companies making up the Topix index on the Tokyo Stock Exchange that close their books in March and released results as of Thursday.

The net profit downturn was experienced in the January to March quarter even in the manufacturing sector, an industry which has been leading a recovery from the COVID-19 pandemic, sinking 18.3 percent to 3.90 trillion yen.

The transportation equipment sector, which includes automakers, posted a 36.5 percent decline in net profit for the reporting quarter.

Similarly, steelmakers suffered a 35.3 percent fall.

Food issues, which were directly impacted by soaring material costs, plunged by 47.7 percent.

In contrast, energy-related and nonferrous metal companies benefited from elevated material prices.

Among nonmanufacturers, marine transportation and airline operators logged greater losses amid soaring energy costs.

Including SoftBank Group, nonmanufacturers saw their combined net profit sink 78.9 percent to 649.30 billion yen. Excluding the investment firm, it was 9.9 percent lower at 2.75 trillion yen.

Hikaru Yasuda, an equity strategist at SMBC Nikko Securities, attributed smaller combined net profit by listed companies partly to reduced output among automakers in line with supply shortages sparked by the COVID-19 lockdowns in China and other factors.

Domestic demand-oriented firms are believed to have suffered from the double weights of elevated material costs and the weaker Japanese currency.

According to the data, sales in the first quarter rose 7.1 percent compared with the previous quarter, and climbed 11.4 percent from a year earlier.

Over 740 listed companies that end their business year in March released earnings reports as of 5 p.m. Friday, with the final tally to total around 900, according to the Tokyo Stock Exchange.

© Kyodo News