【Aging, safety net and fiscal crisis in Japan】No.69: Companies' Operating Profit Margins Are at Record Highs

In this column series, Yukihiro Matsuyama, Research Director at CIGS introduces the latest information about aging, safety net and fiscal crisis in Japan with data of international comparison.

In December 2017, the Ministry of Finance reported corporate statistics for the third quarter of 2017. Figure 1 shows trends in the average operating profit margins across both the manufacturing and non-manufacturing industries. The profit margin across all industries has risen from 2.3% to 5.2% between FY2009 and FY2016, and has reached its highest level in the second quarter of FY 2017. The manufacturing industry's profit margin is higher than the non-manufacturing industry, which does not include the finance and insurance sectors (Figure 1).

Table 1 shows the average operating profit margin by amount of capital. It is evident that profit margins for the larger companies have increased. Therefore, the Abe administration has the right to request a wage increase of at least 3% from the Japan Business Federation (Keidanren), which is an organization for large companies.

Figure 1 Operating profit margins across industries


(Source)Ministry of Finance

Table 1 Operating profit margins by capital amount


(Note) Fiscal year runs from April to March

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