Tohoku Firms Underperforming In Pretax Profit

TOKYO (Nikkei)--After a rush of recovery-driven business following the March 2011 earthquake, Tohoku-based listed companies are experiencing a letdown and facing a bigger drop in profits than firms in other regions.

Although the Tohoku area bore the brunt of the quake and tsunami, companies there have so far been unable to latch onto the demand created by the quickening reconstruction.

The combined pretax profit of 22 midsize firms with headquarters in the region is forecast to fall 33% in the year ending March 31, based on company estimates. This compares with a drop of just 1% for all regions. The total consists of 1,898 listed businesses with March book-closings, excluding financial firms and components of the Nikkei 500 stock index, which have nationwide operations.

Twelve of the 22 Tohoku companies expect worse pretax numbers, while 10 see improvement. Yurtec Corp. (1934), an electrical engineering affiliate of Tohoku Electric Power Co. (9506), is forecasting a 6.8 billion yen pretax loss following a year-earlier 7.3 billion yen profit. Work orders jumped after the disaster but have since fallen.

By contrast, big Tokyo-based builders and materials suppliers are getting an earnings boost from Tohoku reconstruction projects. A number of paving companies are predicting record-high pretax profits, including Nippo Corp. (1881), which expects a 24% rise to 21 billion yen. Taiheiyo Cement Corp. (5233) is forecasting a 65% gain to 30.5 billion yen.

(The Nikkei, March 8 morning edition)

• 
• 
•