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Japan's listed firms expect 1st net profit fall in 3 yrs: survey

This photo taken from a Kyodo News helicopter on Feb. 6, 2015, shows Tokyo's Shinjuku Ward covered in fog. (Kyodo)

TOKYO (Kyodo) -- Japan's major companies are expecting the first fall in combined net profit in three years for the current business year ending next March, as they anticipate the effects of the U.S.-China trade spat, according to a survey released Wednesday.

The survey by SMBC Nikko Securities Inc. showed the total net profit projected for the year by 1,470 companies listed on the Tokyo Stock Exchange's First Section at 36.35 trillion yen ($327 billion), down 2.1 percent.

In addition to trade concerns, many of the companies are worried that the current weakness of the Japanese yen, which benefits exporters, may not last much longer.

By sector, the net profit of transportation equipment manufacturers such as automakers is forecast to fall 17.6 percent, SMBC Nikko said. The fall would be compounded by a profit increase in the previous business year resulting from U.S. corporate tax cuts.

Carmakers are particularly concerned about their business outlook in the U.S. market following President Donald Trump's threat to impose additional tariffs on foreign cars. Toyota Motor Corp. has said the proposed tariffs, if imposed, would cause a 470 billion yen increase in costs.

"Uncertainty over trade tensions has dented corporate sentiment, making it difficult for companies to make optimistic forecasts," said Hikaru Yasuda, equity strategist at SMBC Nikko.

Banks predict an 8.2 percent decline in their net profit, with the Bank of Japan's ultraeasy monetary policy keeping interest rate spreads small and continuing to squeeze profits from lending.

The construction industry expects a 4.9 percent fall, hit by higher labor costs stemming from the country's labor shortage.

On the other hand, electric appliance makers see a 22 percent rise on solid exports, and companies in the land transportation industry forecast a 4.5 percent growth supported by an increase in foreign visitors to Japan.

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