© . FILE PHOTO: A Japanese yen note can be seen in this illustration photo, taken June 1, 2017. REUTERS/Thomas White/Illustration By Tetsushi Kajimoto TOKYO () – More than three-quarters of Japanese companies say the yen has fallen to point of harm to their business, a poll found, with nearly half of companies expecting a drop in profits. The results of the Corporate Survey are one of the clearest signs yet that much of Japan Inc is struggling with higher costs and deteriorating consumer demand due to the weakness of the yen. The survey also found that nearly 60% believe the government should act quickly to restart nuclear reactors, proving that higher energy costs – partly caused by the currency’s depreciation – could change views on nuclear policy. The currency fell to its lowest point against the dollar in about 20 years on Wednesday, slipping past 126 yen. It has contained some losses and traded at 125.6 yen on Thursday. While the yen’s weakness is often a boon to Japan’s export-driven economy, companies at these levels are more concerned about the surge in fuel and commodity imports, which are already soaring as a result of the war in Ukraine. A decades-long shift to producing more goods abroad has also dampened the benefits of a weak yen. “We see the rising energy and raw material costs associated with the weakening currency as negative,” a ceramics executive wrote on condition of anonymity. “We are concerned that this could lead to restrictions on consumption and capital expenditure.” Forty-five percent of companies said they are finding it difficult to deal with the currency’s weakening above 120 yen, while 31% described 125 yen as their pain threshold. This month’s survey was conducted between March 30 and April 8, when the yen moved between 122 and 124 towards the dollar. It surveyed about 500 large and medium-sized Japanese non-financial companies, about half of which responded. PROFIT CLOSED Non-manufacturers, which tend to be more focused on the domestic economy, were more sensitive to the weak yen than manufacturers, but only by a small margin, the survey found. Food processors were generally the most sensitive, with 73% of respondents setting their threshold at 120 yen. They were followed by retailers, of which 64% had the same threshold. “The continued weakening of the yen, on top of higher raw material costs, has dealt a double blow to our business,” said a manager at a food processor. Overall, 48% of companies expect currency weakness to hit profits, with 36% saying it will hurt profits “somewhat” and 12% saying the impact will be “significant”. Some 23% said it would boost earnings, while 30% said it would have no impact. Many food processors and retailers expect a decline in profits, as do many in fiber, paper and pulp manufacturing, steelmaking, auto manufacturing and auto parts. Fifty-seven percent of companies said the government must act quickly to restart nuclear reactors to address energy security, demonstrating how the crisis in Ukraine and higher energy costs have sharply alleviated the issue. “Rising electricity bills hurt our company,” says a manager at a wholesaler, who was in favor of a restart. Nuclear power remains a difficult problem in Japan, where a decade after the Fukushima meltdown, only a handful of the country’s 30 power plants are in operation. A newspaper poll last month found that 53% of voters believe the government should continue restarting nuclear reactors. That was 44% in an earlier survey in September. “Nuclear energy is a necessary evil,” wrote a manager at a machine manufacturer. “It would greatly contribute to the reduction of CO2 emissions and it should be carefully considered as an alternative to the energy sources for which we currently depend on Russia.” (This story is being re-archived to add an omitted word in the first paragraph)
