Prime Minister Shinzo Abe has been urging Japan’s companies to spend their growing piles of money to bolster the country’s economy. Toyota Motor Corp. (7203), with cash swelling to about $37 billion, is beginning to comply.
The carmaker said on Aug. 2 that net income almost doubled to 562.2 billion yen ($5.7 billion) last quarter — more than General Motors Co. (GM) and Volkswagen AG (VOW) combined — as U.S. sales rose and the weaker yen boosted overseas profit. Cash and marketable securities rose 11 percent and totaled the most of any non-bank in Japan, according to data compiled by Bloomberg.
Toyota is starting to spread the wealth. The company is raising capital spending and research expenditure 10 percent this fiscal year, paying workers the highest bonuses since 2008, and planning higher dividends as income surges. The moves show how Abe’s efforts to revive Japan’s economy are gaining support from the country’s biggest exporter and may foreshadow spending by more Japanese companies.
“Abenomics is on its way to creating a better environment for companies,” Toshihiro Nagahama, chief economist at Dai-Ichi Life Research Institute in Tokyo, said by phone. “What Toyota spends its cash pile on may provide a hint of the future of Abenomics.”
The conservative approach of top Japanese companies has been a challenge for Abe as he tries to jump start an economy that has stagnated for two decades. The companies’ cash reached a record 225 trillion yen in the first quarter of this year, exceeding the size of Italy’s economy.
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