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Japan's Jan.-March corporate sales show biggest fall since 2011

This photo taken Dec. 16, 2019, shows Japanese car maker Subaru Corp.'s plant in Ota, Gunma Prefecture, eastern Japan. (Kyodo)

TOKYO (Kyodo) -- Japanese companies suffered the largest fall in sales in the January-March quarter since the economic downturn triggered by the 2011 earthquake and tsunami disaster, revised Finance Ministry data showed Monday, as the coronavirus pandemic was found to have hit more businesses than previously estimated.

    The sales of all industries dropped 7.5 percent to 344.59 trillion yen ($3.3 trillion), revised downward from a 3.5 percent decline in the preliminary data released in June. It was the steepest quarterly fall since the 11.6 percent tumble in the April-June quarter of 2011, when corporate activities sharply deteriorated after the northeastern Japan quake devastation, the ministry said.

    The ministry released the revised figures after collecting data from companies that were unable to reply in time when the preliminary report was being compiled. The initial response rate dropped over 10 points from the previous quarter, apparently due to the pandemic.

    Pretax profit was revised to a 28.4 percent decline to 15.93 trillion yen, from 32.0 percent reported in June. It was still the biggest drop since the July-September quarter in 2009 when pretax profit plunged 32.4 percent.

    Capital spending was revised downward to an increase of 0.1 percent from growth of 4.3 percent in the initial survey, affected by the pandemic but managing to maintain a level close to the year-earlier level.

    Investment by all nonfinancial sectors for purposes such as building factories and adding equipment totaled 15.69 trillion yen, down from 16.35 trillion yen in the preliminary data on June 1, according to the Finance Ministry.

    Capital spending by manufacturers fell 5.3 percent to 4.98 trillion yen, revised down from a 0.6 percent increase shown earlier, while the growth of nonmanufacturer investment was cut to 2.9 percent at 10.72 trillion yen, from the previously estimated 6.2 percent.

    The overall increase of investment followed a 3.5 percent drop in the previous quarter.

    Among nonmanufacturers, capital spending by real estate firms increased 28.2 percent, revised up from a 20.5 percent rise, making up for the weakness in the manufacturing sector.

    On a quarter-on-quarter basis, seasonally adjusted capital expenditure climbed 3.6 percent, revised from the preliminary 6.7 percent growth but logging the first increase in three quarters.

    "Generally, many corporate investments are made for long-run projects so changes in the investment numbers tend to be slower than those of sales and profits," a ministry official told reporters.

    The ministry surveyed 31,528 companies capitalized at 10 million yen or more. Among them, 22,384, or 71.0 percent, responded, up from 19,636, or 62.3 percent, in the preliminary survey.

    Taking into account the latest capital spending figures, the Cabinet Office is scheduled to release another revision of the gross domestic product data for the January-March period on Aug. 3. In June, the office revised up the quarter's GDP to an annualized real contraction of 2.2 percent from a 3.4 percent shrinkage in the preliminary data.

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