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2008年11月 7日 (金)


The Yomiuri Shimbun (Nov. 7, 2008)

Even Toyota can't escape global woes

企業中間決算 あのトヨタですら大幅減益に(117日付・読売社説)

The world economy is on the skids as the financial crisis spreads around the globe, particularly hitting the economies of the United States and Europe, which are being haunted by the specter of recession.


Meanwhile, Japanese corporations have been hurt by the yen's surge against the dollar and euro as well as price hikes in crude oil and raw materials, the ramifications of which are now reflected in their performances.


Many Japanese companies have released or will shortly release their earnings reports on a consolidated basis for the April-September period. A considerable number of companies saw profits drop, and a net decline in profit for all listed companies is expected to occur for the first time in seven years. The margin of profit declines for the entire group of listed companies is expected to be even wider for the business year ending March 31, 2009.


Until last fiscal year, Japanese corporate performances had been buoyed by economic growth in the United States and many other countries and by the weak yen. But this favorable business climate was completely wiped out and a powerful headwind has appeared in the path of Japanese companies.



Precarious situation for many

Toyota Motor Corp. exemplifies the embattled nature of Japanese corporations. The brakes have been applied on the carmaker's long streak of churning out growing profits year after year.


Its operating profit--a measure of the company's earning power from ongoing operations--was slashed by a whopping 54 percent from the same period last year due to the dramatic slump in sales in North America, its main overseas market. The yen's appreciation, which has exceeded the predictions of most corporations, also dealt a blow to the automaker.


Toyota also slashed its earnings projection for the business year ending in March by 73.6 percent from the last business year to 600 billion yen. Even Toyota, one of the world's most profitable manufacturers, finds itself in a precarious position, showing how seriously the global market has been afflicted by dampened consumption.


This is not just limited to the automobile industry. Harsh business conditions also are affecting electronics companies, such as Sony Corp. and Toshiba Corp., which reported sluggish sales of digital home appliances and semiconductors, and export-oriented companies whose revenues come largely from abroad.


Electric power companies and steelmakers also reported profit reductions.


There are, however, some companies that have managed to keep their heads above water in this relentless business environment, including Nintendo Co., which reported record high profits due to robust game console sales. Companies such as this have business advantages due to having lineups of highly popular, strategic products.



Time for firms to reassess

Japanese firms now have to brace themselves for prolonged, harsh business conditions. Given the current environment, it is essential for them to carefully combine both offensive and defensive business measures.


First of all, there is no option but for firms to cut costs as much as possible so they can have the corporate strength to endure the pains of the surging yen. Companies should accelerate the selection of, and concentrate on, operations for moving forward. Mergers and acquisitions might be needed.


It is important for companies to rectify an overdependence on U.S. and European markets and establish global-earning strategies that include such emerging economies as China and other Asian nations. Although its growth rate is slowing, the Chinese economy is projected to grow further.


Bolstering the sluggish domestic market also is crucial.


Japanese corporations also should expedite efforts to hone their research and development capabilities if they want to produce new products and technologies that can create competitive edges in the future.


Can they create business opportunities from this predicament? It is not an easy task, but we hope to see the creation of bold strategies for survival.


(From The Yomiuri Shimbun, Nov. 7, 2008)

20081170141  読売新聞)


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