Top Japanese firms warn of damage from Asia woes

Top Japanese firms warn of damage from Asia woes

TOKYO (Reuters): Japan's top general trading firms on
Wednesday warned that their business climate would remain cloudy
this business year, given a long-running economic slump at home
and financial and political woes in Asia.

The nation's six biggest trading houses or "sogo shosha",
known for handling a great variety of goods and services ranging
from noodles to missiles, said recent political unrest in
Indonesia particularly make them cautious.

The six trading houses, which had a total 690.7 billion yen
(US$5.07 billion) worth of loans, investment and guarantees in
Indonesia as of March 31, mostly forecast their profits rising
only marginally or even falling this business year.

The six firms meanwhile had a total 1.16 trillion yen worth of
such commitments in five Southeast Asian countries -- Indonesia,
Thailand, Malaysia, the Philippines and South Korea.

In the last business year, which ended on March 31, the
trading houses mostly posted glum earnings results, dragged down
by hefty valuation losses on their securities holdings, special
losses from financial restructuring and the Asian woes.

They are Sumitomo Corp , Itochu Corp , Marubeni Corp
Mitsubishi Corp's Mitsui & Co Ltd and Nissho Iwai Corp .

"In 1997/98, the effect of the Asian crisis was felt in the
latter half of the year, but it will take its toll throughout
this business year," Muneo Shigematsu, a managing director of
Sumitomo Corp, told a news conference.

Shigematsu said the Asian crisis, which was reignited by
recent political unrest in Indonesia, would eat into the firm's
operating profit by some four billion to five billion yen.

Of the six firms, Nissho Iwai alone remained a little
confident, saying its business in Indonesia mainly focused on
exporting goods to Japan.

"We believe Indonesia will increase exports to obtain foreign
currencies, so that the impact will be limited," said Toshihiro
Tamura, a senior managing director of Nissho Iwai.

Mitsui & Co Ltd said it had hedged risk on 14.6 billion yen
out of its total 54.1 billion commitment in Indonesia, while
Marubeni also said it had hedged risk on 93.6 billion yen of its
158.3 billion yen commitments in Indonesia.

Shigematsu said Sumitomo plans more financial help for its
affiliates in Southeast Asian nations but not in Indonesia.
But he said Sumitomo still thinks Indonesia is a promising market
for the future and it has not changed its positive stance towards
the country.