Nikkei at New 15-Year High, Takata May Take Years to Solve Air Bag Recall

Hiruki Nakamura
21 May, 2015
New York City

Nikkei average in Japan jumped to a new 15-year high for second day in a row and banks, utilities and electronics makers led the gainers. Takata was in focus after the airbag maker faced parts shortages to deal with larger recall.

[R]4:30 PM Tokyo – Nikkei average in Japan jumped to a new 15-year high for second day in a row and banks, utilities and electronics makers led the gainers. Takata was in focus after the airbag maker faced parts shortages to deal with larger recall.[/R]

Stocks in Tokyo closed higher and the Nikkei index jumped up to a 15-year high for the second day in a row.

Investors bid up large banks and select industrial stocks but pharmaceuticals were under pressure on profit taking.

The all industry activity index in March dropped 1.3%, the first decrease in nine months, compared to 0.2% increase in February, the Ministry of Economy, Trade and Industry said today.

On an annual basis, the all industry activity index in March slumped at a faster pace of 2.4% following a 1.2% decline in the previous month.

The Nikkei 225 Stock Average edged up 6.31 to 20,202.87 and the broader Topix index rose 3.40 to 1,646.80.

The yen closed at 121.06 against a dollar.

Takata Corp said it will increase the purchase of inflator part to one million a month from the current 500,000 after the company enlarged its air bags recall to 34 million vehicles.

The shortage of parts is likely to force the company take at least two years in finishing the U.S. air bag recall.

Stocks in Review

Hitachi, Ltd rose 0.2% to 848.70 after the diversified company’s subsidiary secured two orders of energy storage device for railway traction power supply system from Hong Kong-based MTR Corporation Limited.

House Foods Group Inc edged up 0.4% to 2,346 yen after the foods and beverages maker reported net sales in the year ending in March rose 0.5% to 231.5 billion yen from 232.6 billion yen in a year ago period.

Net income in the year plunged 20.7% to 6.9 billion yen compared to 8.8 billion yen and earnings per share dropped to 67.61 yen from 83.13 yen in the same period a year ago.

The company forecasted net sales for the year ending in March 2016 to climb 6.3% to 246 billion yen and net income to surge 27.7% to 8.9 yen.

LIXIL Group Corporation plunged 7.5% to 2,273 yen after the sanitary equipment provider said net sales in the year ending in March jumped 13.2% to 1.6 trillion yen from 1.4 trillion yen in a year ago period.

Net income in the year soared 110.3% to 44.8 billion yen compared to 21.3 billion yen and earnings per share climbed to 153.17 yen from 73.42 yen in the same period a year ago.

Ms&Ad Insurance Group Holding Inc soared 5.4% to 3,880.50 yen after the life insurer reported revenues in the year ending in March climbed 7.5% to 4.7 trillion yen from 4.4 trillion yen in a year ago period.

Net income in the year surged 45.8% to 136.3 billion yen compared to 93.5 billion yen and earnings per share jumped to 221.34 yen from 150.58 yen in the same period a year ago.

The company forecasted net profit for the year ending in March 2016 to soar 15.2% to 157 billion yen and earnings per share of about 256.45 yen.

Separately, the insurer said it will spend as much as 20 billion yen to buy back 10 million shares between May 21 and September 18.

Sompo Japan Nipponkoa Holdings Inc surged 7.4% to 4,493 yen after the property and casualty insurance company said revenues in the year ending in March soared 9.1% to 3.3 trillion yen from 3 trillion yen in a year ago period.

Net income in the year climbed 22.9% to 54.3 billion yen compared to 44.2 billion yen and diluted earnings per share increased to 132.61 yen from 106.77 yen in the same period a year ago.

The property and casualty insurer forecasted net profit for the year ending in March 2016 to jump 194.8% to 160 billion yen and earnings per share of about 392.12 yen.

Separately, the company plan to buy back approx 6.17 million shares for up to 18.50 billion yen between May 21 and September 18.

The company added as much as 17 billion yen will be spent in acquiring stocks from shareholders and the rest will be used for treasury stocks.