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Nomura says Japan's power dearth will squeeze corporate profits

Published 03/25/2011, 05:25 AM
Updated 03/25/2011, 05:28 AM

TOKYO, March 25 (Reuters) - A shortfall in electric power could squeeze recurring profit by 5 percent or 1.4 trillion yen ($17 billion) in the business year beginning on April 1 at Japanese corporations on the Nomura 400 companies index, the brokerage said in a report on Friday.

"We see a growing risk of prolonged problems with electricity supply at companies covered by Tokyo Electric Power and Tohoku Electric Power ," Japan's biggest securities company said.

As much as 45 percent of Japan's manufactured goods are produced in the area covered by the two utilities, Nomura said. A 10 percent shortfall in power would pare Japan's factory output by as much as 4 percent, it estimated.

Tokyo Electric Power, Japan's largest utility, is struggling to maintain power to households and companies following the loss of nuclear reactors and other power generating capacity in Japan's March 11 earthquake. As temperatures rise in summer and demand peaks, Tokyo Electric expects its power supply capacity to be 46,500 MW, falling short of peak demand of 55,000 MW.

That could lead the utility to impose more partial power outages to avert wider blackouts, forcing some companies to curb production. ($1 = 80.985 Japanese Yen) (Reporting by Tim Kelly; Editing by Michael Watson)

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