Japan Companies’ Ordinary Profits Rise 14.6 Pct in Jan-March

Tokyo, June 1 (Jiji Press)–Japanese nonfinancial companies’ combined ordinary profits grew 14.6 pct from a year earlier to 32,627.1 billion yen in January-March, the Finance Ministry said Monday. The rise was driven by growing demand related to artificial intelligence data centers and improved performance in the wholesale sector due to surging natural resource prices reflecting the tense situation in the Middle East. The profits climbed for the sixth consecutive quarter, logging a record high for the January-March period. Combined ordinary profits at manufacturers soared 42.9 pct to a record 12,923.1 billion yen. The information and communications equipment sector benefited from growing demand for memory chips used in AI data centers, while the electrical machinery sector was boosted by strong demand for factory automation equipment. Nonmanufacturers’ ordinary profits inched up 1.4 pct to 19,704 billion yen. Profits at wholesalers, including trading companies, improved as prices of resources such as crude oil and natural gas rose due to intensifying tensions in the Middle East. Nonfinancial companies’ combined capital spending was almost unchanged at 18,806.4 billion yen, up 0.05 pct. Among nonmanufacturers, capital investment jumped in the goods rental and leasing sector as well as the electricity service sector. But this was offset by a notable decline in capital spending in the information and communications equipment sector among manufacturers, following increased investment to expand production capacity a year earlier. Nonfinancial companies’ sales rose 1.1 pct to 408,661.4 billion yen, marking a record high. “The data are consistent with the government’s assessment that the economy is recovering moderately,” a ministry official said. The official added that the ministry will closely monitor future developments, including the situation in the Middle East and fluctuations in financial markets. END [Copyright The Jiji Press, Ltd.]