JR East, Sharp, Daihatsu Delay Profit Forecasts After Quake

Toyota Motor Corp. (7203)’s Daihatsu minicar unit, Sharp Corp. and East Japan Railway Co. (9020) delayed their financial forecasts for the year, citing difficulties estimating the toll from last month’s natural disaster.

Mitsubishi Motors Corp. (7211), TDK Corp. (6762) and Kobe Steel Ltd. (5406) were also among Japanese companies reporting results today that were unable to provide investors with projections for profit or sales. Sharp finds it “extremely difficult” to calculate earnings forecasts at this time, the nation’s largest liquid- crystal display maker said in a statement.

The delays help illustrate the challenges Japanese companies face as they reel from factory disruptions, component shortages and power outages stemming from the nation’s strongest earthquake on record. Retail sales tumbled the most in 13 years last month after the March 11 disaster led stores to shut and discouraged households from spending money.

“We may have to wait until around July for companies to make their earnings estimates,” Yoji Takeda, who helps manage $1.1 billion in Hong Kong at RBC Investment Management (Asia) Ltd. “From an investor’s point of view, it’s troublesome but we just have to deal with it. It’s an emergency situation.”

JR East, the nation’s biggest train operator, reported its biggest quarterly loss in at least nine years as it booked an extraordinary loss to cover restoration expenses.

Daihatsu, which also makes cars for Toyota, lost 40,000 units of output between March 14 and March 21 and 50,000 between April 1 and April 28, the company said. Sharp’s full-year profit reported today was 35 percent lower than its own forecast.

‘Much Worse’

JR East shares have fallen 21 percent since the March 11 disaster and Sharp declined 8.1 percent.

Sharp’s earnings outlook for the current fiscal year “will likely be much worse than the year before,” said Shiro Mikoshiba, an analyst at Nomura Holdings Inc. “Domestic shipments won’t be back soon after the earthquake and tsunami.”

The government estimates damages from the March 11 temblor and tsunami may amount to 25 trillion yen ($306 billion).

The quake has also hurt consumer demand. Japanese retail sales slumped 8.5 percent in March from a year earlier, the biggest decline since March 1998, the trade ministry said in Tokyo today. The median estimate of 14 economists surveyed by Bloomberg News was for a 6.1 percent drop.

Confidence among both merchants and households fell the most on record last month, a sign consumers may continue to cut back in the months ahead.

Extra Budget

Prime Minister Naoto Kan unveiled a 4-trillion yen extra budget last week to rebuild the northeast area that was devastated by the earthquake and tsunami. The spending aims to provide more than 100,000 temporary homes and clean up debris from the disaster.

Japanese companies may not be able to report earnings on schedule, the Tokyo Stock Exchange said last month. Companies that can’t gauge the full impact of the March disaster on their operations might not have to include earnings forecasts in their financial statements, the bourse said.

The magnitude-9 quake and ensuing tsunami crippled the Fukushima Dai-Ichi atomic plant operated by Tokyo Electric Power Co., leading to the worst nuclear disaster since the Chernobyl accident in 1986 and causing power shortages in eastern Japan. About 26,000 people are dead or missing, according to the National Police Agency.

Earlier this month, the Keidanren, Japan’s largest business lobby, urged member companies to reduce 25 percent of their power usage from July to September to help Tepco avoid blackouts during the period.

Power shortages and parts procurement are giving headaches, Toshizo Tanaka, a Canon Inc. (7751) executive vice president, said yesterday. The world’s largest maker of cameras cut its annual profit and sales forecasts yesterday.

“The supply-chain issue is making things hard for companies to make an estimate,” RBC’s Takeda said. “They probably need more time to gather information to assess the impact on their earnings.”

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editors responsible for this story: Kae Inoue at kinoue@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net

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