Hitachi and Panasonic earnings tell tale of woe

Earnings at Japan's mightiest companies continue to plunge with Panasonic set to book a $3.9 billion (£2.7 billion) annual net loss, insiders warn, while Hitachi says that its loss will be 700 billion yen for the year to March.

Panasonic shares fell 3.6% in Tokyo but that was dwarfed by the record 14% tailspin suffered by Hitachi.

Both companies say the double whammy of restructuring costs and collapsing demand are to blame.

But the warnings now coming thick and fast out of Japan indicate how fast the crisis has hit exporters.

Just last October Hitachi was predicting a 15 billion yen profit. Last year it made a 58.1 billion yen loss.

Rivals NEC Corp and Fujitsu have also forecast full-year losses as the recession curbs spending on consumer and industrial electronics.

Panasonic has caused concern. "Panasonic has an excellent cost-cutting abilities and was seen as healthier than rivals even in the downturn," said Nobuo Kurahashi, a Mizuho Investors Securities analyst.

Japanese companies are "crying out" for the government to sell the yen, whose strength is deepening the worst recession since 1945, an official at the largest business lobby said.

"The yen is the most critical problem for exporters," Masakazu Kubota at Keidanren told Bloomberg. "Whether the government does it alone or in cooperation with others, they should do something about the yen," he said. "Industry is crying out for it."

Japan's currency is trading near a 13-year high against the dollar, cutting the value of overseas sales at a time when exports are collapsing.