Japan Inc. profit to fall for first time in 7 years: poll

Japanese companies' profits are expected to fall for the first time in seven years in the current year through March, hit by a US slowdown, a stronger yen and a spike in raw material costs, a survey said on Tuesday.

Japan's Nikkei business daily, in a poll of 629 publicly traded firms outside of the financial industry, said that average consolidated pretax profits are expected to go down 6.5 percent from last year.

Automakers are among those expected to be hit hardest by a slump in US demand and a stronger yen, which makes their products more expensive overseas.

The auto industry, including parts manufacturers, expects a 26 percent drop in pretax profit, the Nikkei said. Toyota Motor Corp., Japan's largest automaker, earlier said it expects sales and profit declines for the first time in nine years.

A resilient yen is also forecast to push down Honda Motor Co.'s operating profit by around 300 billion yen (2.89 billion dollars).

"We cannot offset the negative impact of the strong yen even if we cut material costs and improve efficiency," Honda vice president Koichi Kondo was quoted by the Nikkei as saying.

The yen in March temporarily spiked above 100 yen for the first time in 12 years on growing concerns about the health of the US economy.

Sharply rising costs of basic materials are also expected to eat into profits. Sumitomo Metal Industries Ltd., which expects pretax profit to plunge 30 percent, is likely to see its materials and fuel costs jump by more than 400 billion yen.

"We plan to increase profit by hiking steel materials prices and through major cost-cutting efforts," says vice president Fumio Hombe.

The fall in profits comes even though the listed firms expect to post a 4.3 rise in sales this year, the newspaper said.

However, non-manufacturers such as trading companies are expected to post a rise in profits.

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