7 June 2001, 16:19  Japan's MoF says Q1 capex supported by machinery, auto sectors

TOKYO (AFX-ASIA) - A Ministry of Finance official said first quarter to March capital expenditure remained solid, supported by strong spending in the machinery and auto sectors and despite the fall off in pretax profit growth.
The official said companies appeared to have continued their earlier spending plans, despite the decline in exports, profitability and sales seen from the end of last year.
The ministry earlier said non-financial firms' capex rose 2.5 pct in the first quarter, compared with a rise of 7.1 the previous quarter, while parent pretax profit was flat, against a rise of 31.9 pct in the fourth quarter.
"Overall, it can be said that solid capex continued in the quarter," he said.
"It is uncertain whether companies expected exports to slowdown in the quarter," he said. "It seems to me that companies basically proceeded with the capex plans that they decided some time ago." The strong rise in capital expenditure growth in the electric machinery sector decelerated only slightly in the first quarter, showing growth of 30.4 pct year-on-year, compared with 31.6 pct in the previous quarter.
The official attributed this to continued strong spending in the microchip and liquid crystal display segments.
Capex in the general machinery sector rose 43.5 pct, against a fall of 4.7 pct the previous quarter due to growth in spending on machinery parts.
The auto sector saw capex rise 30.4 pct in the first quarter, against a rise of 1.6 pct previously, due to some large-scale projects.
Non-manufacturing capex fell 5.8 pct, dragged down by weak service-sector spending, which declined 14.3 pct against a fall of 3.9 pct the previous quarter, mainly due to the effect of a high base the year before.
In 2000, first quarter service sector capex rose 32.7 pct. The official said growth in pretax profit narrowed in the first quarter due to a slowdown in sales as well as rising costs. Pretax profit in the electric machinery sector fell 1.6 pct in the quarter, against a rise of 74.0 pct previously, due to falling sales and rising costs of parts.
Sales in the electric machinery segment decelerated to a rise of 0.4 pct, against 10.1 pct in the fourth quarter.

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