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4-Traders Homepage  >  Equities  >  Tokyo  >  Toyota Motor Corp    7203   JP3633400001

TOYOTA MOTOR CORP (7203)
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Japan's big manufacturers signal tentative willingness on wage hikes

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10/30/2013 | 11:59am CET
Men walk in front of Mitsubishi Motors Corp's headquarters in Tokyo

Japan's big manufacturers, under pressure from Prime Minister Shinzo Abe to boost wages and create a "virtuous cycle" of growth to defeat deflation, are showing signs they are willing to raise workers' pay.

Abe's reflationary policies to stimulate spending and investment have boosted the fortunes of many corporations in Japan, which is now the fastest growing of the G7 rich nations.

Mitsubishi Motors Corp (>> MITSUBISHI MOTORS CORPORATION), a second-tier automaker and key player in the Mitsubishi group of companies, sounded upbeat about the prospects for salary increases for its workers as it completes a decade-long recovery from deep losses.

"Up to now, everywhere in Japan we've done nothing but persevere and do without," the automaker's president Osamu Masuko told an earnings briefing this week. "It's really too bad for people these days. If we could do this for them, it would be great."

Masuko also said the company aims to resume dividend payments for the first time in more than a decade, while sources familiar with the matter say it is preparing to raise about $2 billion from a share issue to pay back a 2004 bailout.

Prime Minister Abe has recently been pressing big companies such as Toyota Motor Corp (>> TOYOTA MOTOR CORPORATION) to go beyond one-off bonuses and increase base pay to help create a self-sustaining cycle of growth that could help pull Japan out of 15 years of deflation.

But wariness about the durability of growth and about weakness overseas has left some big companies reluctant to boost wages.

The latest Labour Ministry data showed that regular pay, which excludes overtime and bonuses, declined for a 15th month in a row in August by 0.4 percent, to 241,131 yen ($2,500). September data is due for release on Thursday.

"We will only consider base pay increases after we have seen results for the full financial year (to March)," said Hitachi Ltd (>> Hitachi, Ltd.) Executive Vice President Toyoaki Nakamura told an earnings briefing on Tuesday.

"The first half exceeded our expectations but with doubts over the U.S. and China, we can't say anything with certainty regarding wage increases."

The electronics conglomerate, which makes goods from nuclear reactors to washing machines, is Japan's largest manufacturing employer with more than 200,000 workers.

BONUSES VS BASE PAY

The comments seemed to be a step back from remarks less than two weeks earlier by Hitachi Chairman Takashi Kawamura, who created a stir as he came out of a meeting of business, labour and government leaders and suggested that his company would be open to the possibility of raising base salaries.

Toyota president Akio Toyoda also told that meeting that he would consider returning higher profits in the form of pay.

Up to that point corporate leaders had been circumspect, willing to boost one-off bonus payments but wary of being saddled with higher fixed costs from a base pay rise - especially after many spent the last decade or more paring labour costs through often painful bouts of restructuring.

One inducement for companies to raise wages was a proposal this month for an early end to a corporate levy that has funded rebuilding after the 2011 earthquake and tsunami, while Abe has called for examining a permanent cut in the corporate tax rate.

But a recent Reuters corporate survey found that only 5 percent of respondents would use the additional savings to raise wages.

For years Japanese firms have been hoarding cash, instead of spending on plants and equipment or raising salaries, due in part to the view that Japan would remain mired in deflation. As a result, corporate Japan is sitting on a cash pile of some 220 trillion yen, Bank of Japan data shows.

Nippon Steel & Sumitomo Metal Corp (>> Nippon Steel & Sumitomo Metal Corp), the world's second-biggest steelmaker, said on Wednesday it would set aside 5 billion yen to increase staff bonuses next year as its business prospects improve.

Executive Vice President Katsuhiko Ota said average bonuses next year would rise between 20 and 30 percent from this year, as the company expects profit to rise.

But Ota declined to comment when asked whether base salaries would be increased, saying unions have not made a formal request on wage hikes.

Nippon Steel President Hiroshi Tomono, who also serves as chairman of the Japan Iron and Steel Federation, said on Monday: "We have adopted a scheme in which earnings are reflected in bonuses. That's the basic way of rewarding employees."

(Additional reporting by Yuka Obayashi; Writing by Edmund Klamann; Editing by Jeremy Laurence)

By Yoko Kubota and Maki Shiraki

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Financials ( JPY)
Sales 2018 28 744 B
EBIT 2018 -
Net income 2018 1 972 B
Debt 2018 14 554 B
Yield 2018 3,03%
P/E ratio 2018 10,53
P/E ratio 2019 10,17
EV / Sales 2018 1,30x
EV / Sales 2019 1,27x
Capitalization 22 730 B
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Mean consensus HOLD
Number of Analysts 24
Average target price 7 558  JPY
Spread / Average Target 8,5%
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Managers
NameTitle
Akio Toyoda President & Director
Takeshi Uchiyamada Chairman
Osamu Nagata Director, Chief Financial Officer & Executive VP
Kiyotaka Ise General Manager-Technology & Development
Shigeki Tomoyama General Manager-Information Technology Division
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