Japan's corporate profits book sharpest dive since 2009 amid global pandemic

Japan's corporate profits in the January-March quarter booked the largest decline since 2009, as numerous companies were hurt financially by the global coronavirus pandemic, which saw demand and consumption slump amid the shuttering of plants and businesses.

According to the Finance Ministry's quarterly survey, pretax profits of domestic companies tumbled 32.0 percent to 15.14 trillion yen (140.76 billion U.S. dollars) from a year earlier, marking the fourth successive month quarterly profits have retreated.

This also marked the sharpest decline since a 32.4 percent fall was booked in the July-September period in 2009 in the wake of the global financial crisis, the ministry's figures showed.

Amid falling global demand, manufacturers felt the brunt of the pandemic, with the transportation equipment sector booking a 50.7 percent dive in pretax profit, the ministry said.

As for the non-manufacturing sector, meanwhile, pretax profits marked significant declines in the service sector, dropping 59.6 percent, while those in the wholesale and retail industry fell 38.0 percent, the ministry's data also showed.

Declining for a third straight quarter, corporate sales in Japan were down 3.5 percent from the previous year to 359.56 trillion yen (3.34 trillion U.S. dollars).

Capital spending by all non-financial sectors increased 4.3 percent to 16.35 trillion yen (152.01 billion U.S. dollars), the ministry's data also showed, with this figure coming on the heels of a 3.5 percent drop in the previous period.

Revised gross domestic product data for the January-March quarter will be released by the Cabinet Office on June 8, with the figures expected to be upwardly revised owing to the increase in capital expenditure, although the rise could be negligible when the drop in private consumption is factored in.

Preliminary data showed Japan's economy shrank an annualized real 3.4 percent in the three-month period due to the coronavirus pandemic.

This was the second successive quarterly contraction and saw Japan enter a technical recession.

The finance ministry polled 31,540 companies capitalized at 10 million yen (92,963 U.S. dollars) or more.