Weak Euro Threats Japanese ExportersWeak Euro Threats Japanese Exporters

Japan's high dependence on exports of electronic products and automotive manufacturers to finally get through two years of sales decline and heavy losses, profits, despite a slight pick up, give the euro's weakness in its head with a brick.

Based on a rebound in global demand and the painful restructuring of the revenue, Japan's leading large companies now expected in March 2011 as the current fiscal year will be a slight improvement in performance.

But the Sony Corporation (Sony Corp), Sharp Corporation (Sharp Corp) and Mazda Motor Corporation (Mazda Motor Corp.) Companies such as the broader euro-zone business, a weak euro could bring more losses to these companies. This situation in the electronic and automotive industry in particular. Financial crisis electronics, and car sales have fallen sharply, many companies heavily in the red.

23% of Sony's sales came from Europe, the company said, the euro fell against the yen exchange rate for each 1 yen, the company's annual operating profit will be reduced by 70 billion yen (about 7,650 million). Sony now expects operating profit of the current fiscal year, 1,600 billion yen.

Sony's chief financial officer Nobuyuki Oneda said the company profitable in the case last week, said that Sony has in fact not be factored into the expected crisis in Greece. If the euro against the yen to keep the current level, then Sony will begin to feel the negative effects.

Japan's economy, exports accounting for heavier, stronger yen may hinder the country's economic recovery. Japan on Thursday announced first quarter of 2010 gross domestic product, economists widely expect a quarter of Japan's economic growth equivalent to an annual rate of 5.9%.

Weak euro, the Japanese exporters to achieve sales in Europe will shrink converted into yen, which cause losses to exporters. Meanwhile, a weak euro makes goods produced in Japan more expensive for European consumers, but also increased profitability in the euro zone more difficult.

Similarly, a weaker U.S. dollar also affect profits. A year ago, the yen against the dollar, a large number of impaired performance of Japanese exporters. However, exporters have more ways to counter the impact of a weaker dollar. One is the China factor. Japan, China has increasingly become a destination for parts and production. RMB exchange rate pegged to the dollar, which many Chinese companies are willing to accept dollars as payment, this can be offset by Japanese exporters in dollar terms the impact of income and reduce currency volatility.

In contrast with this is that the euro is more difficult to purchase spare parts, even in Eastern European countries with lower prices, production costs can not be compared with China. Thus, even if the goods exported to the United States increased sales, a weak euro and sometimes can lead to large losses.

Most Japanese electronics and auto makers are expected to improve performance, is based on the euro against the yen this fiscal year exchange rate assumptions at 120-125. Later Wednesday, the Tokyo market, the euro exchange rate against the yen of about 112.11 yen.

Tokyo Daiwa Institute of Research (Daiwa Institute of Research) electronics analyst Kazuharu Miura said the company had forecast the performance of the euro exchange rate is more conservative basis, the current exchange rate has led to this condition is almost lost.

Earlier this week, Sharp President Mikio Katayama (Mikio Katayama), said Sharp had been carried out in euros on the part of the hedge, but in the future of Europe is still facing a severe business environment.

Automobile industry, Mazda Motor Corporation's European operations heavier. And the larger Toyota Motor Corporation (Toyota Motor Corp) and Honda Motor Company (Honda Motor Co) different, Mazda has not plant in Europe, the company exports to Europe from Japan car full capacity.

In recent years, many Japanese companies have improved efficiency, ability to withstand currency fluctuations increased. IMF (International Monetary Fund) first deputy managing director (John Lipsky) Wednesday at a news conference in Tokyo, said there is no evidence that the recent yen strength on the competitiveness of Japanese exports constitute damage.
by Himfr Tian
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