TOKYO -- Japan's leading businesses are increasingly prepared to make domestic capital investments as the economy gains a better footing, according to Nikkei Inc.'s quarterly survey of top executives.
Publicly traded companies collectively racked up record pretax profits in the year ended March 31, while holding 100 trillion yen ($806 billion) in cash on hand. Anticipating greater consumer spending, businesses are laying the foundations for growth. The poll, conducted June 3-19, received responses from the heads of 148 corporations.
Asked how the cash reserves would be spent, 53.4% of respondents cited capital investment, up nearly 7 points from the previous survey. Research and development and mergers and acquisitions were among the other top choices at 40.5% and 34.5%, respectively. Sharing the wealth with shareholders and employees declined to 19.6% and 10.1%. Up to two choices were allowed.
Domestic capital spending in fiscal 2015 is expected to exceed fiscal 2014 levels for 43.3% of respondents, up 16 points. This reflects a shift toward boosting outlays domestically, more so than in such overseas markets as the U.S., Europe and other parts of Asia.
Fanuc is investing 130 billion yen to augment domestic production of machine tool parts. Seven & i Holdings plans to raise domestic capital spending this fiscal year by 18% to 326 billion yen.
The weak yen makes overseas acquisitions more expensive for Japanese buyers. Yet 80% of respondents said that their stance in considering such deals would not change. Only 2% said that the currency's weakness would make them more reluctant.
On whether there is a tangible sense of the domestic economy expanding, 92.6% answered yes, up 18.1 points. And 54% expect the economy to be improving toward the end of the fiscal year next March. A recovery in consumer spending was cited by 88.1%, with 57.1% pointing to a rebound in capital investment.
