Japan Inc profits under siege from China slowdown

  • Bizline

Jan 20, 2019-

Two prominent Japanese electronics and equipment makers warned of profit declines over the past week due to the impact of the US-Sino trade war, stoking worries of widespread cuts to corporate earnings forecasts and a hit to economic growth. Nidec Corp, whose tiny motors are found in phones, PCs, cars, and robots, slashed its annual operating profit outlook by a quarter on Thursday, saying the trade war and a slump in smartphone demand is discouraging manufacturers in China from spending. And Yaskawa Electric Corp, maker of robots used in factory automation, also lowered its annual operating profit outlook for the second time in three months on Jan. 10 because of the trade war. Japan sends around a quarter of its electronics and heavy machinery exports to China, so it is heavily exposed to the current bout of weakening demand in the world’s second-largest economy. And because companies quickly cut employee bonuses and capital expenditure when sales fall and inventories start piling up, the potential blow to Japan’s growth is significant, economists say. “I suspect a lot of economists will downgrade Japan’s growth forecasts for the first quarter of this year, because downside risks have clearly increased,” said Norio Miyagawa, senior economist at Mizuho Securities. (REUTERS)

Published: 20-01-2019 10:44

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