Thai Flood to Drag Japan Company Profits 3.9 Percent, SMBC Says

Thailand’s worst floods in more than 50 years may drag down full-year profits of listed Japanese non- financial companies by 3.9 percent as production and operations are impacted, said to SMBC Nikko Securities Inc.

Industries including transportation equipment, electronics, pulp and paper, and rubber products makers will be hit particularly hard, Junichi Makino, chief economist at SMBC Nikko wrote in a report dated today. Full-year net income for manufacturers may be dragged by 5 percent, it said.

Supply chains and production at Japanese companies have been disrupted from the natural disaster. Canon Inc. (7751), the world’s largest camera maker, cut its annual profit forecast, citing floods in Thailand, while Toyota Motor Corp. said production of about 6,000 automobiles in Japan could be affected by floods at factories in Thailand.

Back-up production and an increase in demand associated with reconstruction in Thailand may offset the negative impact on earnings, SMBC’s report also said.

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net..

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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