Japanese companies are returning to profit just three months after reporting record losses in the nation's deepest post-war recession, luring overseas investors at the fastest pace in two years.
Companies from Honda Motor Co., the nation's No. 2 automaker, to Hitachi Chemical Co., the top maker of carbon anodes for lithium ion batteries, swung to profit following 8.6 trillion yen ($1.3 trillion) of losses in the previous quarter. Net income for the biggest companies on the Tokyo Stock Exchange reporting first-quarter results totaled 1.09 trillion yen, according to data compiled by Bloomberg. Analysts are boosting profit forecasts for the first time since September 2007, according to Nomura Holdings Inc.
"We expect a lot of analyst upgrades coming through after the earnings results," said Diane Lin, who helps oversee about $1 billion at Sydney-based hedge fund Pengana Capital. "This could spur a bit of interest back to the market."
Reduced spending on payrolls and capital investments, combined with the fastest expansion in factory production in five decades, led to the recovery. The economy expanded at a 3.7 percent annualized rate last quarter, the government said yesterday, after a record 14.2 percent contraction in the first three months of 2009.
The Nikkei 225 Stock Average rallied 46 percent from a 26- year low on March 10. It fell 3.1 percent yesterday to 10,268.61.
Increased Production
Factory output rose 8.3 percent last quarter, the fastest since 1953 and a rebound from the record 22 percent plunge in the January-March period.
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