Osaka-Thursday, May 3, 2012
Nikkei, Japan’s leading newspaper specialized
in business and economy reported today that over half of listed Japanese
companies enjoyed increased profit for the fiscal year ending March 2012.
This mostly attributes to improved
profitability by many companies with structural reform even under severe
circumstances such as high yen, flood in Thailand and the March 11 Japan
Disaster.
As many as 10% of the companies are to mark
the greatest profit in the history, when total profit amount has decreased by
almost 20% from 2011. Success and
failure of corporate strategy separates winners from losers.
1. Financial statements of which
companies have been analyzed?
It is the 242 companies (excluding
financial institutes and emerging market) whose financial announcements have
been made by May 2. This is equivalent
to 15% of all listed companies covering 36% of marketing value.
2. Which companies are the winners? How many are they?
They are 121 companies, equivalent to 50% of
the companies analyzed. With more upcoming
financial announcements, as many as 800 companies equivalent to 52% of all
listed companies are estimated to improve profit from 2011.
This is far greater than 455 companies (30%)
in March 2002 when the IT bubble collapsed and 367 companies (20%) in March
2009 when the economic crisis proliferated worldwide.
Companies in red are only 7%, which is far
less than 21% in 2009.
31 companies enjoy greatest profit in their
history. With more financial
announcements to be made, as many as 153 companies equivalent to 10% of all
listed companies are estimated to mark greatest profit in their history.
Major Companies with Greatest Profit in
History for Fiscal Year Ending March 2012
(Source: Nikkei, translated by the author)
Company
Name / Profit (Billion Yen) / Profit Increase / Reasons for the Profitability
Increase
Soft Bank / 573.6 / 10% / Strong sales in
iPhone
Fanuc / 228.5 / 17% / Strong sales in
automotive robots
All Nippon Airways / 68.4 / 85% / Cost
reduction, increased international flights
Oriental Land / 66.2 / 25% / Increase in customers
with 10th anniversary events of Tokyo Disney Sea
Kuraray / 53.9 / 6% / Strong sales in resin
for car gasoline tanks
Unicharm / 48.3 / 12% / Increase in disposable
diaper demand in Asia
Kobayashi Pharmaceutical / 20.0 / 6% / Strong
sales in OTC
Komeri / 19.6 / 28% / Strong sales in
machine tools at home centres
Fujitsu General / 9.8 / 13% / Business
growth in air conditioning products in emerging markets
Kagome / 9.2 / 10% / Increase in sales of
tomato juice
Start Today / 7.6 / 30% / Increase in apparel
EC site users
Note:
Consolidated base, companies whose financial announcements have been made by
May 2. Profit increase is from fiscal
year ending March 2011.
3. Why the winners were
successful in improving their profitability?
1) Competitive businesses and
products
(1) Fanuc
Fanuc, a market leader in factory automation
and robots, increased purchase order leveraging their marketing positioning of
20% worldwide market share in robots for automotive and general industry. This led to the greatest profit in their
history.
(2) Komatsu
Komatsu, a leader in construction equipment,
expanded their mining machinery business that has been enjoying market share of
40%. This compensated for negative
factors such as weak business in China and high yen.
2) Business development in
emerging markets
(1) Japan Tobacco
Japan Tobacco increased sales in emerging
countries including Russia, leading to increase in profit.
(2) Unicharm
Unicharm, a leader in daily commodities
enjoyed strong business of disposable diapers in Indonesia market which already
had market share of 50%. The CEO
commented, “We managed to maintain high profitability by winning growth market.”
3) Structural reform
(1) All Nippon Airways
With increased competition with Japan Airlines
and Low Cost Carriers, All Nippon Airways reviewed their cost structures
including aircraft lease fees and personnel cost. This resulted in the greatest profit in
history after 6 years.
(2) Fujitsu General
Fujitsu General transferred their air
conditioner production to Asian countries such as Thailand which led to profitability
improvement.
4. Which companies are losers?
They are mostly the consumer electronics with
underperforming TV set business.
Their profits decreased by 18% from March
2011.
Total loss of 7 companies that announced
huge loss including Sharp, Nintendo and Kawaski Kien is as much as 710 billion yen. This led to 20% decrease in the total net
profit of the companies analyzed. When
the losses of the 7 companies are excluded, profit decrease of such companies shrinks
to 9%.
5. What is the outlook for
2013?
Profit of listed companies for fiscal year
ending March 2013 is estimated to increase by double digit because the negative
effects of the Japan Disaster are to have gone through by then.
Companies with competitive products are assumed
to continue enjoy strong business while companies that are suffering with underperforming
LCD panel business such as Sharp are assumed to remain in red.
Thus, the disparity of profitability among
listed companies is likely to become even more conspicuous.
