May 13, 2016 - 12:10 AM EDT
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Companies listed on Tokyo exchange to see drop in combined profit

The combined net profit of companies listed on the Tokyo Stock Exchange's First Section is expected to fall for the first time in four years for the business year through March, hit by a decline in crude oil prices and slowdown in emerging economies, a tally by a brokerage showed Friday.

The total net profit of 995 companies that had reported their earnings results for fiscal 2015 by Thursday was down 3.3 percent from a year earlier, according to data compiled by SMBC Nikko Securities Inc.

More companies are expected to release their results soon, but the new data are unlikely to change the projected decline, the brokerage said.

It will be the first decline in the major Japanese companies' combined net profit since Prime Minister Shinzo Abe's government introduced a policy mix dubbed "Abenomics" in 2012 to prop up the economy.

The tally also showed the companies' combined pretax profit dropped 0.2 percent from the previous year.

"The yen's strength weighed on corporate earnings and stocks," said Hiroshi Watanabe, senior economist at SMBC Nikko Securities. Looking ahead, he also warned of fallout from the powerful earthquakes that hit southwestern Japan in mid-April.

A stronger yen eats into Japanese exporters' overseas profits when repatriated.

By sector, the combined net profit of the mining industry plunged 85.8 percent, while iron and steel saw a decline of 55.2 percent, both hit by lower prices.

Data showed that trading houses, which had heavily invested in resources, booked big losses, while electronics and machinery makers were unprofitable due to the economic slowdown in China and a surge in the yen against the U.S. dollar this year.

While banks took a hit from the Bank of Japan's negative interest rate policy, which has squeezed their profit margins on lending, the real estate sector has benefited as a result of lower mortgage rates.


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Source: News (May 13, 2016 - 12:10 AM EDT)

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