Three-quarters of Japan firms bemoan current yen weakness as bad for business

(Corrects so as to add dropped phrase in first paragraph)

By Tetsushi Kajimoto

TOKYO (Reuters) -Greater than three-quarters of Japanese corporations say the yen has declined to the purpose of being detrimental to their enterprise, a Reuters ballot discovered, with nearly half of corporations anticipating a success to earnings.

The outcomes of the Reuters Company Survey are one of many clearest indicators but that a lot of Japan Inc is scuffling with greater prices and worsening client demand brought on by the yen’s weak spot.

The survey additionally confirmed nearly 60% assume the federal government ought to transfer shortly to restart nuclear reactors, proof that greater vitality prices – pushed partially by the foreign money’s slide – could also be altering opinion on nuclear coverage.

The foreign money fell to its lowest towards the greenback in about 20 years on Wednesday, slumping previous 126 yen. It has pared some losses and was buying and selling at 125.6 yen on Thursday.

Whereas yen weak spot is commonly a boon for Japan’s export-driven financial system, at these ranges corporations are extra anxious about the way it inflates gasoline and uncooked materials imports, that are already hovering because of the conflict in Ukraine. A decades-long shift to producing extra items abroad has additionally muted a weak yen’s advantages.

“We see the surging vitality and commodity prices that include the weakening foreign money as a unfavourable,” one supervisor at a ceramics maker wrote on situation of anonymity.

“We’re involved that might result in constraints on consumption and capital spending.”

Forty-five % of corporations mentioned they discover it arduous to deal with the foreign money weakening past 120 yen, whereas 31% described 125 yen as their ache threshold.

This month’s survey was carried out between March 30 and April 8, when the yen moved between 122 and 124 to the greenback. It polled about 500 massive and midsize Japanese non-financial corporations, of which round half responded.

EARNINGS HIT

Non-manufacturers, which are usually extra targeted on the home financial system, have been extra delicate to the weak yen than producers, however solely by a skinny margin, the survey confirmed.

Meals processing corporations have been essentially the most delicate general, with 73% of respondents placing their threshold at 120 yen. They have been adopted by retailers, 64% of which had the identical threshold.

“The continued weakening within the yen has come on high of upper uncooked supplies prices and dealt a double blow to our enterprise,” a supervisor at a meals processor mentioned.

Total, 48% of corporations anticipate the foreign money’s weak spot to hit earnings, with 36% saying it might harm income “considerably” and 12% saying the affect could be “appreciable”.

Some 23% mentioned it might be a lift to income, whereas 30% mentioned it might haven’t any affect.

Many meals processors and retailers anticipate a success to earnings, as do many in fibre, paper and pulp manufacturing, steelmaking in addition to automaking and auto elements.

Fifty-seven % of corporations mentioned the federal government ought to transfer shortly to restart nuclear reactors to deal with vitality safety, exhibiting how the Ukraine disaster and better vitality prices have put the problem in sharp aid.

“Surging electrical energy payments are hurting our enterprise,” mentioned one supervisor at a wholesaler, who was in favour of a restart.

Nuclear energy stays a troublesome concern in Japan, the place a decade after the Fukushima nuclear meltdown solely a handful of the nation’s 30-odd energy crops are working.

A public opinion ballot by the Nikkei newspaper final month confirmed 53% of voters imagine the federal government ought to proceed with restarting nuclear reactors. That in comparison with 44% in a earlier survey in September.

“Nuclear energy is a mandatory evil,” wrote a supervisor at a equipment maker.

“It will tremendously contribute to the discount of CO2 emissions and it ought to be rigorously thought-about as an alternative choice to the vitality sources we’re presently relying on Russia for.”

(Reporting by Tetsushi Kajimoto; Modifying by David Dolan and Edwina Gibbs)