Mon, December 06, 2021


60% of Japan companies post losses or profit falls for April-December

Sixty percent of companies listed on the First Section of the Tokyo Stock Exchange which released earnings reports through Thursday posted losses or reduced profits for the April-December period, according to a tally by SMBC Nikko Securities Inc.

SMBC Nikko tabulated the financial results of 636 companies, which excludes financial institutions and accounts for 47.6% of the total firms listed on TSE’s First Section. While a harsh business climate continues particularly in the non-manufacturing sector, some companies have stood out as efforts launched before the novel coronavirus crisis have fit perfectly with new lifestyles brought about by the pandemic, resulting in record profits.

■ Mixed results by sector


According to SMBC Nikko, 280 of the 636 companies, or 44%, saw a decline in net profits, while 104, or 16.3%, suffered losses for the period.

Total of sales by the 636 companies fell by nearly 10% from the same period in 2019, and total net profits decreased by 29.5%. While that margin of profit decline marked an improvement from that for the first-half period through September 2020, when it stood at 40.7%, the extent of recovery has varied by industry.

Non-manufacturing industries such as travel and food services saw net profits drop 48.6%, a worsening from the first-half results of 30%. The land and air transportation sectors both suffered significant losses.

■ Capitalizing on stay-at-home trend

On the other hand, some companies have reported upbeat earnings thanks to launching subscription services, strengthening online shopping businesses or starting other ventures before the pandemic.

“Demand from people staying at home has continued. It is very strong,” Hiroki Totoki, Sony Corp.’s executive deputy president and chief financial officer, said at a press conference on Wednesday.

Sony’s online subscription services that allow unlimited home access to music or games are doing well. For the April-December period, the company posted a 87% increase in consolidated net profit to a record high of ¥1.0647 trillion, based on U.S. accounting standards.

Since the 2000s, Sony has shifted to profitable subscription and insurance services after its TV and other home electronics businesses became sluggish amid competition from South Korean rivals. As a result, Sony was well placed to capture growing demand when the pandemic led more people to refrain from going out and to work from home.

Its game, music and financial units all reported increased profits. The company also revised upward to ¥1.085 trillion its annual net profit forecast for the year through March 31.

■ Seeds of new businesses bear fruit

Fast Retailing Co., the operator of the casual clothing giant Uniqlo, reported a slight decline in sales and profits for the September-November period, based on international financial reporting standards, as the number of customers shopping at actual stores declined. However, online sales grew by about 50%, and the company expects sales and profits to be in the black for the full year ending August 2021. In 2018, it constructed a huge logistics warehouse in Tokyo for its online shopping business, which is proving to be the right move.

Alpen Co., a major sporting goods retailer whose name was once synonymous with skiing goods, posted record sales for the first-half period that ended in December. The company projects annual net profit to hit a record high, about 500 times better than the previous fiscal year. While the number of skiers has been on a decline in Japan, Alpen has opened outdoor specialty stores and strengthened its selection of golf and outdoor products. Golf and camping have grown in popularity as leisure activities that allow people to avoid crowds, and the company has cashed in on brisk sales of related products.

“It’s difficult to respond quickly to changes caused by the coronavirus pandemic,” said Takashi Ito, a senior strategist at Nomura Securities Co. “Businesses for which the companies planted seeds have contributed to strong earnings.”

Published : February 07, 2021

By : The Japan News