Japan's record profits bring worrying implications

Japan's record profits bring worrying implications
Japan economy.

TOKYO - A warm breeze is blowing for Japanese companies operating abroad, but at home, a lingering chill is in the air.

Total pretax profit for companies across all industries, excluding finance and insurance, came to 18.06 trillion yen (S$205 billion) in the October-December period, a quarterly record, according to data released Monday by the Ministry of Finance. In the January-March quarter, a weaker yen, lower interest rates and cheaper crude oil should give Japan Inc. even more of a boost.

The country's leading industries are in fine form. Profits were up 40.3 per cent on the year for automakers, 56.6 per cent for electronics companies and 57.7 per cent for communications equipment makers.

But despite this strong showing, few executives are celebrating. One reason for the sober atmosphere is the country's spring labour-management negotiations, which are in full swing. The bigger issue, however, is this: Their record earnings are due almost entirely to overseas operations.

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