16 top firms retain hefty nest eggs-JAPAN

http://search.japantimes.co.jp/mail/nb20081224a1.html

Wednesday, Dec. 24, 2008

Kyodo News
Sixteen top manufacturers including Toyota Motor Corp. and Canon Inc. built up hefty retained earnings — totaling around ¥33.6 trillion — at the end of September, double the amount at the end of March 2002, just before the economy entered a recovery phase.

The figure, taken from results of a survey by Kyodo News released Tuesday, suggests the companies are retaining earnings from their boom years rather than earmarking them to maintain jobs.



Since April, these companies have shed some 40,000 jobs, many announced in recent weeks amid the global financial crisis.

But as the world faces recession, their top priority is to reinforce their financial bases and are likely to continue with their cost-cutting efforts, including slashing jobs.

They are expected to see their net profits drop this business year, but many of the 16 firms have pledged to pay out their full stock dividends, with some even eyeing increases.


Labor union officials representing temporary workers — who have been the chief target of layoffs — criticized management for building up profits without sufficiently supporting workers and for cutting jobs without remorse when earnings outlooks started to look grim.

The survey indicated that retained earnings — basically after-tax income minus dividends — jumped 98 percent at the 16 manufacturers from about ¥17 trillion at the end of the 2001 business year.

During the past years, companies began to place more weight on attracting shareholders by increasing dividends and share buybacks as Western-style management spread.

Currently, five of them are planning to increase dividends for the business year that ends in March, while five others are expecting to keep their dividends unchanged from a year earlier.

Among the 16, Sony Corp. and Panasonic Corp. — formerly Matsushita Electric Industrial Co. — have so far kept their dividend outlooks unchanged even though they are now anticipating profit declines.

The survey covered automakers Toyota, Nissan Motor Co., Honda Motor Co., Mazda Motor Corp., Suzuki Motor Corp. and Isuzu Motors Ltd.; auto parts maker Denso Corp.; and electronics makers Canon, Sony, Ricoh Co., Sharp Corp., Fujitsu Ltd., NEC Corp., Panasonic, Toshiba Corp. and Hitachi Ltd.