Super Mario creator Nintendo Co Ltd forecast a return to the black after two years of losses and camera maker Canon Inc raised its profit forecast by nearly 10 per cent as a weaker yen, spurred by aggressive deflation-fighting policies, bolstered the outlook of Japan’s tech companies.
The two companies, however, show no sign of reciprocating the government’s helping hand with fresh job-creating investment. Canon, still worried about a struggling global economy, pared its capital expenditure.
As the first blue-chip Japanese tech companies to report quarterly results, Nintendo and Canon are often seen as a barometer for the sector’s earnings. The tech sector directly employs around two million workers in Japan.
“We welcome Abenomics,” Canon chief financial officer Toshizo Tanaka said at a news briefing, acknowledging the impact of Prime Minister Shinzo Abe’s economic stimulus policies.
“The Japanese economy moves on this kind of mood so we value this and hope to find success,” he added.
At Canon, a weakening yen is helping to compensate for a squeeze on compact camera sales as consumers switch to photo snapping on their smartphones.
And the softer Japanese currency may buy Nintendo more time to plug its Wii game console successor, the Wii U, which has disappointed with dull sales as it also competes with smartphones and tablets.
For the business year to December 31, Canon, which relies on foreign markets for four-fifths of its sales, lifted its operating profit forecast to 450 billion yen.
Nintendo, which generates three-quarters of its revenue abroad, forecast an operating profit of 100 billion yen after two years of losses as its Wii boom ebbed.
Canon raised its forecast dollar rate for the year to 95 yen compared with the 85 yen forecast issued just three months earlier.
Nintendo estimated a rate of 90 yen to the dollar for the year to next March.
Its president, Satoru Iwata, told a news briefing in Osaka that the figure was “conservative”.
Nintendo sold 3.45 million Wii U consoles from its November launch until March 31, far below the 5.5 million it initially predicted. For this business year, it is aiming to sell nine million.
For Japanese business leaders worried about their ability to compete globally, particularly against South Korean rivals such as Samsung Electronics Co Ltd and LG Electronics Inc, the yen decline fulfils a long-held wish.
Fabricating goods worth almost $400 billion a year, Japanese makers of TVs, mobile phones, printers and personal computers account for a sizeable chunk of Japan‘s $5 trillion economy.
Canon’s operating profit in the first quarter dipped 34 per cent to $552 million, which the company blamed on a weakened global economy and the hit to its compact camera business from smartphones. Nintendo posted a full-year operating loss of 36.4 billion yen.
Corporate heads who have praised Abenomics include Sony Corp CEO Kazuo Hirai. His company and other Japanese TV makers, Panasonic Corp and Sharp Corp, have struggled to fend off competition from Samsung Electronics as a strong yen bit into profits.