davidstockmanscontracorner.com / By Min Jeong Lee, Yuko Takeo and Nobuyuki Akama, Bloomberg Business •
After first-quarter earnings in Japan wrapped up this month with the steepest plunge since 2011, the prospect for an increase in annual profits is about to get even dimmer.
Expect a round of corporate earnings downgrades in September, said Norihiro Fujito, a strategist at Mitsubishi UFJ Morgan Stanley Securities. Trends that slammed profit in the first quarter — a stronger yen, negative interest rates and slumping China growth — haven’t reversed. At stake is a second straight year of earnings decline that could bury Prime Minister Shinzo Abe’s push for companies to boost capital spending and raise wages to spur economic growth.
“A lot of companies may be lowering their forecasts in September,” said Fujito. A slower recovery in the U.S. economy than some had expected is also weakening the outlook for Japan’s carmakers and other exporters, he said.
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