The Yomiuri Shimbun
Corporate earnings have been significantly harmed ahead of companies' quarterly or annual settlement of accounts at the end of March, following damage to factories caused by the March 11 earthquake and tsunami and suspended operations as a result of planned power outages.
An increasing number of firms are revising their business results downward or having difficulties closing their books, while others have decided to postpone their earnings announcements.
After the quake, NEC Corp. announced it would likely show a deficit for the current fiscal year ending in March 31. In February, the company forecast it would break even in terms of after-tax profit.
The loss will result from the temporary suspension of operations at NEC's six plants in Fukushima and Miyagi prefectures, and the postponement of information technology-related contracts from many companies that usually place orders in March.
Hitachi Ltd. had forecast a record after-tax profit of 230 billion yen and planned to pay 3 yen per share as its year-end cash dividend. However, it is now "undecided" about the dividend after being forced to stop operations at its three plants, including its mainstay Hitachi facility in Ibaraki Prefecture.
Even companies that suffered minor damage from the quake have lowered their forecasts for after-tax profits.
One such firm is medical equipment manufacturer Terumo Corp. "Due to planned outages, the operating rate of our plants has decreased," a public relation's official said.
Toyota Motor Corp. was forced to reduce its production by about 140,000 units, while Honda Motor Co. cut production by about 33,000 units in the two weeks after the disaster, the companies said.
Automakers have become unable to produce cars even though they want to sell them, a situation seriously harming exports that previously were brisk.
Some companies whose plants escaped direct damage also had to suspend operations because they could not procure supplies from damaged parts manufacturers. Overseas plants are experiencing similar problems.
Major automakers are currently investigating the effects of the March 11 disaster and have yet to revise their earnings. However, they also are likely to revise their business results downward, as the devastating quake and tsunami are considered certain to reduce their profits.
There also are concerns that the economic repercussions will be prolonged.
Global car production by all Japanese automakers is likely to drop by 15 percent to 25 percent in the period ending in March 2012, according to Nomura Securities Co.
Meanwhile, 1,135 listed companies were forced to suspend their operations or suffered other setbacks following the disaster, according to Tokyo Shoko Research Co.
Many companies also said their business had been hindered by damage to their office buildings or planned outages.
"We're behind schedule in compiling our earnings report," an official of Parco Co. said.
Nitori Holdings said it has postponed its earnings announcement for the year ending in February to April 4. It was originally scheduled for Wednesday.
The Tokyo Stock Exchange has moved to help disaster-hit companies by easing rules on the disclosure of corporate earnings and allowing them to report their earnings "when data are finalized." The TSE usually requires listed companies to release earnings within 45 days of the end of their business year.
Many companies also have said they cannot predict how their business results or earnings reports will be affected.
"If the damage affects the earnings announcements of many leading companies, this also will affect the stock market," said Hisatsune Kobayashi of Nikko Cordial Securities Inc.
(Mar. 29, 2011)
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