Japanese Listed Companies Expected 46% Sharp Decline in March Fiscal Net Profit... Direct Hit from COVID-19

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[Asia Economy Reporter Jeong Hyunjin] Major Japanese companies are significantly lowering their net profit forecasts due to the economic impact of the novel coronavirus infection (COVID-19), reported Nihon Keizai Shimbun on the 29th. In Japan, listed companies finalize their annual performance in March, and it has become inevitable to adjust forecasts due to the growing impact of COVID-19 since the outlook made in January and February.

According to an analysis by Nihon Keizai of 337 listed companies that disclosed revisions to their March fiscal year-end performance forecasts from February 15 to the 28th of this month, the total net profit forecast at the time of the third-quarter earnings announcement in January and February was about 5.3 trillion yen (approximately 64 trillion won). However, recent adjustments show a reduction of about 46% (2.4047 trillion yen) compared to the original estimate.

Nihon Keizai stated, "Since the analyzed companies represent about 20% of all companies that close their fiscal year in March, the scale of net profit decline is expected to increase further."

By industry, the automobile sector is experiencing significant damage. Nissan Motor had forecasted a net profit of 65 billion yen for the March fiscal year-end as of February, but due to the impact of the COVID-19 situation, it revised its forecast downward to a net loss of 85 billion to 95 billion yen, marking its first deficit in 11 years since 2009. The decrease in new car and parts sales due to restrictions on outings contributed to this. Denso, Japan's largest auto parts manufacturer, revised its performance estimate, reducing its net profit for the March fiscal year-end by 157 billion yen from the original forecast.

The decline in international oil prices has also prominently worsened the performance of resource-related companies such as refineries and trading companies. JXTG Holdings, a Japanese company engaged in petroleum refining and sales, is expected to record a net loss of 300 billion yen due to a sharp increase in inventory valuation losses, reducing net profit by 455 billion yen from the forecast. Marubeni, a general trading company, also lowered its March fiscal year-end net profit forecast by 390 billion yen due to increased losses in its oil and gas development business segment.

The deterioration in performance of domestic-oriented companies, which were not significantly affected during the 2008 global financial crisis, is also notable. Oriental Land, which operates Tokyo Disneyland and others, forecasts a decrease of about 14 billion yen in its final net profit for the March fiscal year-end compared to the estimate. Mitsukoshi Isetan Holdings, which operates department stores, also reduced its forecast by 18 billion yen, resulting in a net loss of 11 billion yen.

This content was produced with the assistance of AI translation services.