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Which Japanese firms are most at risk in a US downturn?

April 10, 2008
By Ken Worsley


Earlier this week, Nikkei Veritas published it’s list of the 20 Japanese firms that depend most heavily on the North American market for their operating profit. Of course, high dependence on the US market is not necessarily connected with suffering negative effects due to a US downturn, though it is certainly one risk factor.

Upon seeing the headline, the name Honda jumped into my mind. I thought too soon: Honda ranked #5 on the list, with 42.9% of it’s operating profit and 41.2% of sales being dependent on North America (Honda does lead in the sales category). The real #1 was a bit of a surprise.

With 48.6% of its operating profit coming from North American operations, Kikkoman is the firm most dependent on the region for revenue. It is followed by Nissan, Takata, Topcon and Honda. Rounding out the top ten are Taiheyo Cement, Yakult Honsha, Keihin, Akebono Brakes and Toyo Tires. Other notables are Yokohama Rubber at #13, Tokai Rubber at #17, Toshiba at #18, Astellas at #19 and Asics at #20.

One firm that does not believe it will be affected by a US downturn is farm equipment maker Kubota, which ranked #14, with 25.5% of its operating profit being derived from North America. Kubota is seeing a decline in the amount of equipment being ordered by small-scale family farm operations, but is seeing increases in orders for tractors from mid-size operations.

What we’d like to know is how much land used for corn or wheat last year is being swapped for the other this year…and how much new acreage is being devoted to such crops.

By the way, Kikkoman believes that its soy sauce has become a condiment that Americans cannot do without, and foresees continued growth in the market for Japanese food products in America. Sales for FY2007 are projected to have been up about 5% and Kikkoman expects strong results again in 2009.

Filed Under Business, Economics, US 

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Comments

6 Responses to “Which Japanese firms are most at risk in a US downturn?”

  1. Garrett on April 11th, 2008 2:52 am

    Well, Kikkoman has a lot of competition in Japan, less in North America.

    According to The Economist, Caterpillar is benefitting from the US economic downturn as exports go up. I wonder if Kubota is being hurt at all in businesses in which they compete with Caterpilar, such as construction equipment.

  2. Pieric on April 11th, 2008 12:47 pm

    But Henri Marchetta, previous President of CECE, said earlier this year :

    “In our industry, the world is divided in three zones : Asia, Europe and North America. Exports from one continent to another is very difficult, sometimes impossible.”

    So how could Caterpillar benefit from US economic downturn?
    Or does The Economist meant that international operations results look great…. when converted in weak US dollar?

    CECE is the Committee for European Construction Equipment (www.cece.eu)

  3. fibogann on April 15th, 2008 12:49 am

    Kikkoman is surprising, I didn’t think of Americans consuming so much soy sauce to matter, though they must have less competition in the US. They must source a good amount of their soy from the US anyway.

    nintendo and Sony didn’t make the top 20? Even if they’re not so tied to the US, it would make sense to look at Europe as well. I’m not sure if this is really an accurate measure of how bad firms might get hurt.

  4. Ken Worsley on April 15th, 2008 9:10 am

    fibogann, I agree with that; the flaws in the survey are clear, but the data interesting nonetheless. Adding Europe would give a much clearer overall picture.

  5. J on April 18th, 2008 11:00 am

    Cat can benefit from the fall in the dollar.

  6. ollie on April 19th, 2008 10:42 pm

    Cat can benefit from the fall in the dollar.

    Which can only hurt Kubota, in terms of US sales…or so goes conventional thinking. Their prices have not yet changed.

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