Corporate Japan plans big jump in capital spending

TOKYO -- Japanese companies remain eager to invest and are planning the biggest year-on-year rise in capital spending since the global financial crisis, a Nikkei survey shows.

Covering nearly 1,400 firms, the latest survey focused on revisions to investment plans since the start of fiscal 2013. Planned capital expenditures total 25.9 trillion yen ($250.4 billion), 13.1% higher than last fiscal year. Japanese capex hasn't grown that much since fiscal 2005.

Moreover, budgets went up by 1.8% midway through the year, something that hadn't happened since fiscal 2010. Planned investments are up in 17 of 32 industries, with an increase of 3% among nonmanufacturers versus 1% for manufacturers.

Japanese businesses see domestic demand holding steady even after next April's consumption tax increase. Domestic investments are set to rise 14% over the previous fiscal year at 842 companies with comparable spending plans. Driving this growth are nonmanufacturers, which plan to invest 14.6% more than in fiscal 2012 and have raised their budgets by 3.8% over initial figures for the current year.

In the telecommunications sector, capex budgets are up 8.7% compared with preliminary figures. Fresh from big overseas acquisitions, SoftBank has increased its planned outlays by 230 billion yen. President Masayoshi Son has said the telephone and Internet group will cram five years' of investment into two.

Homebuilders, such as Sekisui House, have tacked on 15.7% in planned spending.

Manufacturers intend to invest 8.5% more in Japan than last fiscal year, but their budgets have changed little from initial estimates. "Some firms are pushing back investment to wait for tax breaks," said Jiro Makino, president of Makino Milling Machine, an industrial toolmaker. Such moves could keep capital spending strong beyond next spring.

In one notable commitment to Japanese manufacturing, Kawasaki Heavy Industries has lifted its domestic capex budget by 20% as it prepares to produce parts for Boeing 787 airliners.

Planned overseas investments are up 33% on the year at the 842 companies with comparable figures. For the first time, foreign investments will account for more than 40% of total capital spending. Manufacturers aim to invest 22.9% more abroad than last fiscal year, with a 55% jump in North America and a 30% rise in Europe. They have revised their overseas budgets upward by 2.7% so far this fiscal year.

Toyota's foreign capex budget is 6.4% higher than the initial figure. It plans to boost production in emerging markets, with the weaker yen also contributing to the rise. Auto parts maker Denso, which has budgeted an extra 14.6%, is gearing up for output increases in the U.S. and Mexico, said President Nobuaki Katoh.

Hitachi will ramp up production of elevators and other machinery for what President Hiroaki Nakanishi called "an expansion of our overseas infrastructure business."

Not all firms are feeling as ambitious. Canon has cut 11.5% from its initial capex budget amid poor growth in digital camera sales overseas. Fast-food group Yoshinoya Holdings has slashed its spending plans by 58.4%, almost halving new restaurant openings. Even among automakers, Suzuki has lowered its figure by 10%, rethinking plans in India, Southeast Asia and elsewhere.