(Corrects spelling of Mitsubishi Electric president's name in
By James Topham
TOKYO, March 22 More than half of Japanese firms
expect a profit rise in the country's next traditional business
year, a Reuters poll showed on Friday, but investors looking to
gain from the fattened coffers may be dismayed as companies keep
the cash in-house.
Japanese economic sentiment is rising as Prime Minister
Shinzo Abe's policy mix of monetary and fiscal stimulus lifts
hopes the export-driven economy is emerging from a slump caused
from the fallout of the European debt crisis and a territorial
spat with major trade partner China in the financial year that
ends later this month.
Abe's policies have helped drive the yen to three and a
half-year lows against the dollar, supporting the
traditional export engine and adding to gradual pickup in the
export markets for a range of Japanese goods from cameras to
Fifty-four percent of the 243 Japanese companies that
responded to the question in the Reuters Corporate Survey said
they are forecasting a rise in results for the financial year
that starts in April from the previous period, while 30 percent
answered they expect roughly the same amount.
"The weaker yen is lifting the competitiveness of Japanese
companies and higher stock prices are causing consumer sentiment
to pick up," said a respondent at a electronics firm that
forecasts a slight rise in profits.
Japan's consumer confidence index hit its highest since
mid-2007 in February with expectations for price increases
rising, in a sign an economic recovery is gradually broadening.
"For households and corporations that have been exercising
fiscal restraint up to now, spending will likely increase since
economic conditions globally are on the path to improvement and
expectations of changes to Japan's fiscal policy are moving
(domestic) stocks and foreign exchange in a good direction,"
said Akihiro Morishige, a researcher at Mitsubishi Research
R&D EYED FOR RESERVES
While higher profits often lead Western firms to increase
shareholder value by lifting dividends and buying back shares,
few Japanese firms are entertaining such actions, according to
the survey conducted between March 4-18 for Thomson Reuters by
In response to a poll request to list the top three choices
for utilizing cash on hand, research and development topped the
list, while maintaining reserves was second and overseas and
domestic expansion essentially tied for third place. Lifting
dividends and share buybacks, where the second-to-last and last,
respectively, of the seven available choices.
Many companies in Japan, particularly consumer electronics
makers like Panasonic Corp, have cut investments in
recent years to deal with financial losses.
"For firms that have seen their technological advantage
slip, there is a need to invest in R&D to regain lost ground,
and for firms that have a strong technological advantage, such
as component makers, there is a need to keep investing in order
to maintain it," Morishige said.
Some companies are already increasing their investment
"From fiscal 2013 on, and a little clearer than previously,
our top strategy for growth with be (R&D) investment," Kenichiro
Yamanishi, the president of Mitsubishi Electric Corp
told a small group of reporters earlier this week.
But the start of a wide scale investment spree may take some
time as companies wait to see if the next step in "Abenomics,"
structural reform, is able add to the boosts that big spending
and a push for hyper-easy monetary policy have provided so far.
"It's not just our industry, but all across Japan, capital
investment is not starting to grow and investments to increase
production are not improving," Panasonic Chairman Fumio Ohtsubo
said at an electronics industry event last week.
The poll was taken alongside the monthly Reuters Tankan
survey that showed on Thursday that confidence among Japanese
manufacturers improved for the fourth consecutive month in March
and that a weaker yen and the government's stimulus plans are
helping to lift sentiment.
The Reuters Corporate Survey polls 400 target companies that
are each capitalised at more than 1 billion yen. The firms,
which are split evenly between manufacturer and
non-manufacturers, are not required to answer every question and
provide responses on the condition of anonymity.
(Additional reporting by Maki Shiraki, Reiji Murai; Editing by