Shiseido, Omron, Sony Implement Restructuring
"Increase in Voluntary Retirements at Mid-sized and Large Companies Expected"
As the Japanese stock market continues its record-breaking rally, Japanese companies that have failed to keep up with the upward trend are undergoing restructuring.
Bloomberg reported on the 4th (local time) that blue-chip Japanese companies left behind in the Tokyo stock market's upward momentum are carrying out large-scale restructuring as a last resort. Blue-chip stocks refer to shares of companies with a long history of stable profits and dividend payments, characterized by profitability and sound financial structures.
Shiseido, Japan's largest cosmetics brand, recommended voluntary retirement to about 1,500 domestic employees last week. Sony also laid off 900 employees, about 8% of its entire staff, from its video game division. Thermometer and sensor manufacturer Omron plans to cut about 2,000 jobs worldwide, including around 1,000 domestic positions, and lay off employees aged 40 and over who have worked for more than three years.
Shiseido and Omron are representative companies that failed to shine even as the Tokyo stock market rose about 20% from the beginning of the year, lifting the stock prices of their peers. Their stock prices fell about 40% from last year's peak due to deteriorating profitability amid the slowdown in the Chinese economy. The report interpreted that these companies carried out restructuring to appeal to investors that they are striving to revive their performance momentum.
Shuhei Oba, an analyst at Citigroup, evaluated, "Shiseido's move will improve the profitability of its domestic business segment." Masahiro Nakano, an analyst at Jefferies, said, "Omron's stock recovery sentiment is likely to remain sluggish for the time being," but added, "Performance will improve once restructuring is complete." After announcing early retirement programs, Shiseido's and Omron's stock prices rose by 2.5% and 1.9%, respectively.
According to the Tokyo Shoko Research Center, the number of listed companies offering such voluntary retirement programs in Japan increased to 41 last year, the first rise in three years. It is also expected that more medium-sized and large companies in Japan will introduce voluntary retirement programs this year.
Meanwhile, the Nikkei index closed at 40,109.23, up 0.5% from the previous session, buoyed by the Nasdaq rally. This is the first time the Nikkei index has surpassed the 40,000 mark at closing.
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