Nippon Yusen Earnings Drag Tokyo Stocks

123jump.com Staff
27 Mar, 2009
New York City

Stocks in Japan closed higher for the week on the optimism that U.S. economy may stop deteriorating further. Weak earnings from Nippon Yusen K.K. and weaker outlook of Komatsu Ltd lowered the investors sentiment. Credit Saison Company led gainers in the Nikkei 225 index with a rise of 10.3%.

[R]7:00AM New York, 7:00PM Tokyo – Stocks in Japan closed higher for the week on the optimism that U.S. economy may stop deteriorating further.[/R]

Stocks in Tokyo edged higher at close but investors were mostly cautious in the session. Investors were faced with lower earnings from Nippon Yusen K.K. and Komatsu Ltd.

The Nikkei 225 index declined 0.1% or 9.36 to 8,626.97 and Topix index decreased 2.28 or 0.3% to 824.53. During the week Topix increased 7.8% and Nikkei index rose 8.6%.

Komatsu dropped 6.4% after the Nikkei newspaper reported that operating profit may drop as much as 50% in the next fiscal year beginning next week.

Nippon Building gained nearly 7% to 926,000 yen on the media speculation that the government is looking to create a fund of 1 trillion yen to purchase assets from real estate investment trusts. The speculation lifted stocks of the companies in the sector and the TSE REIT index surged 8.4% but has lost nearly 66% since the peak in June of last year.

The highly leveraged third largest bank Mizuho Financial Group Inc is looking to lower its exposure to the stock market. The Nikkei 225 Average has continued to sink and trade lower before the recent surge in the last two weeks.

The incoming chief executive Takashi Tsukamoto said in a local television interview that reducing the bank holding of 2.9 trillion yen stock portfolio is the main priority. The bank will lower the holdings to 2 trillion yen and may sell these stocks to government controlled fund set up to buy stocks from banks.

The sharp decline in stocks forced Mizuho to raise $4.4 billion to replenish its capital base.

Gainers & Losers

Of the stocks in Nikkei 225 Average, 106 increased, 105 declined and 13 were unchanged.

CSK Holdings Corp led decliners in the Nikkei 225 index with a loss of 8.2% followed by losses in Komatsu Ltd of 6.4%, in Mizuho Financial of 6.1%, in Resona Holdings of 5.5%, in Fast Retailing of 4.4% and in Nippon Yusen of 3.9%.

Credit Saison Company led gainers in the Nikkei 225 index with a rise of 10.3% followed by gains in Mitsubishi Paper of 8.9%, in Oki Electric of 7.4%, in Mitsui Sumitomo of 6.3% and in Fuji Heavy Industries of 5.6%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 9.36 or 0.11% to 8,626.97, Hang Seng index in Hong Kong increased 10.52 or 0.07% closed to 14,119.50, CSI 300 index in China higher 19.14 or 0.77% closed to 2,498.93. ASX 200 index in Australia increased 25.70 or 0.70% closed to 3,672.30. The KL Composite index in Malaysia lower 0.04 or 0.00% closed to 885.43.

The Kospi Index in South Korea decreased 6.29 or 0.51% to close at 1,237.51. SET index in Thailand closed higher 1.41 or 0.32% to 440.81 and JSE Index in Indonesia increased 42.77 or 3.01% closed to 1,462.74. The Sensex index in India increased 45.39 or 0.45% closed to 10,048.49.

Nippon Yusen Earnings

Nippon Yusen K.K. lowered its revenue, earnings and earnings per share estimate for the year ending in March of this year.

The shipping line estimated annual revenue of 2.449 trillion yen, earnings of 136 billion yen and 11.40 yen per share.

The revised earnings forecast is 81% lower than the previous estimate at the end of January.

The company maintained its year-end dividend of 2 yen and annual dividend of 15 yen.

The press release also noted, “Although the forecast of operating income is down 48.0%, the forecast of recurring profit was only lowered by 6.8% due to dividends received from subsidiaries and affiliates and other factors. The percent decline in the forecast of operating income was larger than on a consolidated basis (12.3%). This was due to non-consolidated forecasts previously being announced on a different date from consolidated forecasts.”