Kirin, Seiko Fall on Earnings

123jump.com Staff
01 May, 2008
New York City

Stocks in Japan fell on the downgrade of economic growth by the Bank of Japan and a spate of negative earnings news from Kirin Holdings and Seiko Epson Corp. March cash earnings of employees rise 1.2% at small companies and 1.4% at large and mid-size companies. Seiko Epson reported that annual profit for the year ended March 31st fell to 19 billion yen as net sales fell 4.8% to 1.3 trillion yen from 1.4 trillion a year earlier.

[R]5:00AM New York, 7:00PM Tokyo - Japan slashes economic growth rate to 1.5% from 2.1%. March cash earnings of employees rise 1.2% at small companies and 1.4% at large and mid-size companies.[/R]

Stocks in Japan fell on the downgrade of economic growth by the Bank of Japan and a spate of negative earnings news from Kirin Holdings and Seiko Epson Corp.

Market sentiment

In Tokyo trading Nikkei 225 fell 0.6% or 83.13 to 13,766.86, but rose 10.6% in April, and the broader Topix Index slumped 0.9% or 12.15 at 1,346.16.

In the first section of the Tokyo Stock Exchange 7.9 billion shares worth 1 trillion yen were traded and in the second section 350 million shares valued at 10 billion yen changed hands.

Of the Nikkei 2255 index shares 61 gained, 154 declined, and 10 were unchanged. Heiwa Real Estate Co. led advancers in the index shares with a rise of 11.05% followed by Shiseido rising 5.41%.

Japan slashes growth fore to 1.5%

The Bank of Japan reported today in its Outlook for Economic Activity that Japan''s economic growth is slowing due to the adverse effects of rising energy prices and raw material costs.

The bank also notes that housing investment and business fixed investments has been weaker compared to the forecasts made in October 2007.

According to the central bank, while housing investment is expected to recover gradually in the first half of 2008, economic growth is expected to slow on weak export growth to the U.S. and rising commodities and energy costs. However, the central bank expects the growth to pick up gradually.

The Bank of Japan noted, “The rate of real GDP growth for fiscal 2008 is likely to register around 1.5 percent, lower than the previous projection. The growth rate for fiscal 2009 is expected to be in the range around 1.5% to 2.0%. There are, however, downside risks to the economy stemming from uncertainties regarding future developments in overseas economies and global financial markets as well as the effects of high energy and materials prices.”

Monetary authorities also believe that financing condition at small firms and some non-manufacturers are becoming somewhat less accommodative, and “this seems likely to continue for a while”.

March cash earnings rises 1.2%

The Ministry of Health, Labor and Welfare reported today in the Provisional Report of Monthly Labor Survey that March total cash earnings of workers for industries with 5 or more people increased 1.2% from a year ago to 285,224 yen, while contractual cash earnings and scheduled cash earnings advanced 0.9% to 271,545 yen and 0.6% to 280,818 yen respectively.

Also non-scheduled cash earnings and special cash earnings grew 4.1% at 20,727 yen and 7.3% at 13,678 yen in that order.

Total hours worked in the month however fell 0.3% to 150.5 hours.

In addition, labor turnover increased 1.9% for all employees and turnover among full-time employees was 2.3% and that part-time was 0.8%.

Gainers & Losers

Heiwa Real Estate Co. led gainers in the Nikkei 225 index shares with a rise of 11.05% followed by increases in Shiseido Co. of 5.41%, in Mitsubishi Electric Corp. of 5.08%, in Nippon Soda Co. of 4.34%, and in West Japan Railway 3.93%.

Kirin Holdings led decliners in the Nikkei 225 index shares with a drop of 6.59% followed by losses in Toagosei Co. Ltd of 6.47%, in Obayashi Corp. of 6.36%, in Sumitomo Trust & Banking of 5.45%, and Mitsubishi Estate Co. of 5.13%.

Kirin Holdings fell after reporting that first quarter operating profit declined 50% on rising raw material costs and lower sales. The company recorded a net loss of 375 million yen for the first time in four years.

Sumitomo Trust & Banking and other financial stocks fell on speculation that the central bank is not likely to raise the benchmark rate this year. Mizuho Financial Group shed 5%, Resona Holdings fell 4% and Mitsubishi UFJ Financial Group tumbled 3.76%.

Seiko Epson profit declines

Seiko Epson reported that annual profit for the year ended March 31st fell to 19 billion yen as net sales fell 4.8% to 1.3 trillion yen from 1.4 trillion a year earlier.

During the year sales in the inkjet printer market was largely flat as growth in the Asia and Europe offset slowing growth in Japan and the U.S.