Photo/Illutration Katsuya Nakanishi, president of Mitsubishi Corp., at a news conference in Tokyo on Nov. 8 to announce first-half financial results for fiscal 2022. The company projects more than 1 trillion yen in net profits for the full year, a record among trading houses in Japan. (Hideki Aota)

Trading and other companies outside the manufacturing sector benefitted enormously from the steep fall in the value of the Japanese currency in recent months, whereas the performance of manufacturers was patchy due to a surge in prices of materials caused by the cheaper yen.

But overall, bottom-line profits posted by Japanese companies listed in the First Section of the Tokyo Stock Exchange before the regrouping of the TSE this spring, are projected to be a record for any six-month period, according to SMBC Nikko Securities Inc.

The estimate is based on business results for the first half of fiscal 2022 released by 779 companies, or 59.1 percent of the 1,318 businesses listed in the First Section, excluding those in the financial sector, as of Nov. 8.

Their combined total in sales amounted to 189.2 trillion yen ($1.29 trillion), a 18.3 percent year-on-year rise.

Although their operating profits stood at 13.9 trillion yen, down 1 percent from the same period in 2021, net profits expanded by 14.2 percent year on year to 15.4 trillion yen.

Trading houses raked in huge profits on the back of the deprecation of the yen, which fell to its lowest level in decades.

Six of the nation’s largest trading companies renewed their net income records over the period from April to September, and said they expect to post record net profits for all of fiscal 2022.

Mitsubishi Corp. said its net profits for fiscal 2022 will likely top 1 trillion yen, a first by any Japanese trading house.

Trading companies are involved in diverse global business dealings. The value of their earnings denominated in foreign currencies ballooned when they were converted into yen.

Their financial results were also buoyed by a sharp surge in energy prices, such as coking coal and iron ore over which they hold extensive business interests, as the war in Ukraine intensified the trend.

The steep depreciation of the yen also pushed up earnings of maritime shipping companies as demand for the distribution of goods remained high with a growing number of people working from home and staying home due to the novel coronavirus pandemic.

Railway operators and aviation companies returned to profitability as restrictions were lifted on people’s movements, compared with the early days of the health crisis.

In total, net income of the nonmanufacturing companies increased by 30. 1 percent over the first six months of this fiscal year from the corresponding period a year ago.

In contrast, the downside of a falling yen was keenly felt among some automakers as well as other companies in the auto industry.

Although companies in the sector saw their sales increase by 17.6 percent, their net profits fell 14.5 percent as their operations took a hammering from the cheaper yen, which made expensive raw material and energy prices even more costly.

Net profits among the manufacturing companies grew only 3 percent over the April-September period from the first six months of last fiscal year.

Subaru Corp., whose key market is the United States, posted a rise of about 70 percent in net income, capitalizing on the weaker yen. Mitsubishi Motors Corp. also saw a record net income.

But Toyota Motor Corp., the nation’s largest automaker, reported a fall of around 30 percent in operating income and a drop of about 20 percent in net income, compared with the first half of the previous fiscal year.

Its profitability was dragged down by a steep increase in raw material prices, including those for aluminum and steel.

Nine of the nation’s leading 10 electric utilities, which rely on imports of fuel, reported net losses.

(This article was combined from reports by Hideki Aota, Kohei Kondo, Junichi Miyagawa and Takashi Yoshida.)

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