Tuesday, December 13, 2011

No. 12: Three factors to increase current profits than planned in the current turbulent times (December 14, 2011)

According to the survey conducted by Nihon Keizai Shimbun, more than half of the listed companies that will close the current account year on March 31, 2012 are expected to increase the current profits than planned. Japan has a total of 1,692 listed companies that close the account on March 31 every year, and 936 companies, or about 55% of the 1,962 companies, are expected to improve the current profits and 171 companies, or about 10%, are expected to achieve the highest current profits.

The factors that allow the 936 companies to achieve such favorable results can be divided into three categories. One is the strong domestic demand. The companies classified in this category include Softbank that is a mobile phone carrier, Yamada Denki that is the leading volume retailer of electric products, and Bookoff that is a secondhand bookseller chain, and Kameda Seika that is a famous Japanese snack maker. The second category contains companies that successfully developed markets in newly industrialized countries. They include Fanuc that is a robot maker, Uni-charm that is Japan’s leading napkin maker, Marubeni that is one of Japan’s general trading companies, and JGC that is an engineering company. The third category contains such companies as Toray, Kuraray, and Nidec, all of which are enjoying a big market share in the respective markets in Japan.

In summary, the three factors are the ability to develop the domestic market, the ability to cultivate foreign markets, and the ability to increase the share with excellent technology. In short, the efforts to focus on the fundamentals seem to have worked well.

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