【Aging, safety net and fiscal crisis in Japan】No.242: COVID-19 reduces corporate operating profits by 30%

The Ministry of Finance conducts a quarterly survey on the performance of for-profit companies with a capital of JPY 10 million (US$ 92,600) or more. The number of companies surveyed is 943,261 for non-financial and insurance and 11,604 for financial and insurance. The Ministry of Finance announced the results of the survey for the first quarter of 2020 (i.e., January 2020-March 2020) on June 1st.

As shown in Figure 1, total sales decreased by 3.5% from JPY 372.5 trillion (US$ 3.45 trillion) in the first quarter of 2019 to JPY 359.6 trillion (US$ 3.33 trillion) in the first quarter of 2020. Total operating profits decreased by 32% from JPY 22.2 trillion (US$ 206 billion) to JPY 15.1 trillion (US$ 140 billion) during the same period (Figure 2). As shown in Table 1, the industries in which operating profits fell sharply were service, wholesale/retail, transport/postal, automobile, chemistry, and oil/coal. There is also concern that corporate performance in the second quarter of 2020 will continue to deteriorate. If this is the case, corporate tax revenues will fall significantly in 2021.

Figure 1 Total sales of all industries except finance/insurance industry

Figure 2 Total corporate operating profits of all industries except finance/insurance

Table 1 Corporate operating profits by industry　(JPY billion)