By Masaki Kondo
May 13 (Bloomberg) -- Japan’s makers of precision instruments advanced in Tokyo trading after Olympus Corp. and Citizen Holdings Co. forecast returns to profit. Hitachi Ltd. tumbled after posting a record loss.
Olympus, the world’s top endoscope maker, and watchmaker Citizen jumped 12 percent. Nissan Motor Co. surged 6.5 percent after projecting a narrower-than-expected loss. Hitachi, which makes nuclear reactors and home appliances, tumbled 10 percent. Mitsui O.S.K. Lines Ltd., Japan’s No. 2 shipping line, dropped 5.1 percent after Nomura Holdings Inc. lowered its rating.
“Cost cuts make it possible for some companies to forecast better earnings but a recovery will be limited unless demand picks up,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees about $6.1 billion in Tokyo. “A possible earnings rebound is already fully reflected in current valuations.”
The Nikkei 225 Stock Average drifted between gains and losses and was up 66.99, or 0.7 percent, to 9,365.60 as of 12:43 p.m. in Tokyo. The broader Topix index added 4.75, or 0.5 percent, to 890.18, with three stocks advancing for every two that slumped.
Stocks on the Nikkei traded at 44 times average estimated profit for fiscal 2009, compared with the Standard & Poor’s 500 Index’s 16 times, Bloomberg data show. Through yesterday, 28 percent of Nikkei companies had soared by at least half since March 10 when the stock gauge reached a 26-year low.
Olympus, Citizen
Olympus leapt 12 percent to 1,921 yen, poised for the sharpest climb since Oct. 30, after projecting a profit for the year to March 2010. Analysts had anticipated a loss forecast. Citizen, the world’s biggest maker of mechanical watches by volume, surged 12 percent to 525 yen after saying it will return to profit.
Nipro Corp., a maker of medical equipment, jumped 5.2 percent to 1,553 yen after saying in preliminary results that profit for last fiscal year was more than double its estimate. A gauge of precision-instrument makers, which includes the three companies, was the biggest gainer among the Topix’s 33 industry groups.
Nissan soared 6.5 percent to 543 yen. The company forecast a net loss for fiscal 2009 that was almost half the amount analysts had expected. The carmaker plans to slash 20,000 jobs in response to the industry-wide slump in the U.S., traditionally Nissan’s most profitable market.
“The key is how much companies are reducing costs,” said KBC Securities analyst Andrew Phillips in an interview with Bloomberg Television. Following Nissan’s cost reductions, the carmaker “could well be breakeven in the second half.”
Rising Oil
Hitachi dived 10 percent to 343 yen, set for the steepest plunge since Feb. 2. The company projected a loss of 270 billion yen ($2.81 billion) for this year after posting a record 787.3 billion yen deficit for the 12 months ended March 31.
Mitsui O.S.K. lost 5.1 percent to 614 yen after Nomura cut its rating on the stock to “neutral” from “buy,” citing falling demand for car transportation. Smaller rival Kawasaki Kisen Kaisha Ltd. dropped 2.5 percent to 383 yen. A gauge of shipping companies fell the most among Topix groups.
Inpex Corp., Japan’s largest oil and gas explorer, added 2.9 percent to 741,000 yen. Closest domestic rival Japan Petroleum Exploration Co. rose 2.4 percent to 4,300 yen.
Crude oil for June delivery rose as much as 1.6 percent today after climbing 0.6 percent to $58.85 a barrel in New York yesterday, the highest settlement since Nov. 11.
Nikkei futures expiring in June rose 0.4 percent to 9,360 in Osaka and added 0.5 percent to 9,360 in Singapore.
To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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