By Yoshio Takahashi and Juro Osawa Of DOW JONES NEWSWIRES TOKYO -(Dow Jones)- With the yen at 15-year highs to the dollar and buoyant against the euro, the blue-chip exporters propping up Japan's fragile economic recovery are left coaxing the government into weakening the yen, while stoically, if nervously, reiterating earnings forecasts in the meantime. Sony Corp. (6758.TO), Toyota Motor Corp. (7203.TO) and other Japanese electronics and auto makers are increasingly fearful that the currency trend will bite into profits earned overseas when they are translated into yen, and will make their products made in Japan less competitive abroad. Executives and analysts alike say that while such exporters can adjust corporate strategies to some extent to deal with the yen's march, ultimately it is simply beyond them. "We should protect our company on our own," Osamu Suzuki, chairman and chief executive of auto maker Suzuki Motor Corp. (7269.TO), said at a news conference Thursday. "But I think (the yen's current situation) is out of our control...I hope that (the government) will hear the cries" for help, he said. The executive said that when the dollar weakens by one yen, it reduces Suzuki's annual operating profit by Y4 billion. Suzuki expects an operating profit of Y80 billion for this fiscal year through March. Meanwhile, faced with the strong yen and concerns about a weakening U.S. economy, Sony said Thursday it has no plans to change the full-year global sales target of its liquid crystal display televisions. Conceding there is little Sony can do to offset the currency's impact, Senior Vice President Yoshihisa Ishida at a news conference said it would be difficult to raise TV prices, but that the company will reconsider the rate at which it lowers product prices. "We buy a lot of parts in dollars, so even if that rate moves, there isn't a huge impact," Ishida said. "However, when it comes to the euro, we really feel the foreign exchange impact and there is very little we can do about it," said Ishida. Observers of such companies that are the mainstay of Japan's economy--an economy that is now expected to slip to third place in global rankings behind China this year--agree that currency concerns are becoming a dominant factor in weighing exporters prospects this year. That is an unwelcome development after Japan's major exporters reported solid April-June earnings. Some of them, including Sony, even went so far as to raise their forecasts for the fiscal year through March. "Any optimism is now quickly fading, because of the yen's continued rally," Nobuo Kurahashi, an analyst at Mizuho Investors Securities, said. On Tuesday, the dollar dropped to Y83.58, its lowest since June 2, 1995, while the euro slumped to Y105.44, its weakest since July 12, 2001, as investors perceive the Japanese government as struggling to launch effective countermeasures. At 1031 GMT Thursday, the dollar was trading at Y84.58 and the euro was at Y107.49. Suzuki's concerns are shared by many auto makers. Nissan Motor Co. (7201.TO) chief operating officer Toshiyuki Shiga, also the chairman of the Japan Automobile Manufacturers Association, has repeatedly warned recently that the strong yen is hurting auto exports and that it could hamper the country's export-led economic recovery. "I hope each country will cooperate to minimise the impact of the yen's strength, and I hope the (Japanese) government will make such efforts," he said earlier this month. Honda Motor Co. (7267.TO) chief financial officer Yoichi Hojo even went so far as to say recently that vehicles the company builds in Japan are not economically feasible at a rate of Y85 to the dollar or less. To be sure, a strong yen is not all negative. It benefits Japanese companies seeking overseas acquisitions, as exemplified by Asahi Breweries Ltd.'s (2502.TO) announcement Thursday that it will buy P&N Beverages Australia Pty Ltd., Australia's third-biggest soft drink maker by sales volume, for Y27.2 billion. The yen has been strengthening gradually for several years, and auto and electronics companies have moved to cut costs and shift production overseas. But the rapidity of the latest yen surge means they simply can't react quickly enough to make a difference. Rather that use strategic firepower, some exporters use financial instruments to try to control the pressure--namely, striking dollar forward contracts as a countermeasure to cope with the weakening U.S. currency. But while such measures can provide some breathing space, they are not ultimately a solution in themselves for Japanese manufacturers, said Shigeru Matsumura, an analyst at SMBC Friend Research Center. Matsumura's bleak assessment is that "there are probably no other measures that they can take to support their consolidated earnings in the short term." Honda has taken that message to heart: The country's third-biggest auto maker by sales volume has made dollar forward contracts at Y90 that will cover 90% of its currency exposure for the fiscal second quarter through September, the company's CFO Hojo said earlier this year. "For the (fiscal) third quarter, we'd like to make (more of such contracts). But it's hard" to do so at the dollar's current levels, he said. Japanese electronics giant Panasonic Corp. (6752.TO) said that it has already made forward contracts for the dollar at Y92 and the euro at Y121 for the fiscal second quarter to September. But it is unlikely that the company can continue to make forward contracts at favorable rates if the yen remains strong, a spokesman at Panasonic said. The limited options to cope with the weakening dollar leaves many exporters with the increasing risk of reducing earnings forecasts for the current fiscal year to March--if the dollar stays at its current level or drops even further. The unit is already well below the Y90 or so on which most companies base their projections. Among Japanese car makers, Mazda Motor Corp. (7261.TO) is relatively susceptible to the yen's fluctuations because of its high ratio of output for exports to its overall domestic production. The car maker exported about 80% of the vehicles that it produced in Japan in the last fiscal year ended March. Mazda declined to comment on whether the strong yen will force it to cut its earnings outlook or whether the company is taking any steps to absorb the impact of the yen. "Though the sensitivity to currency movement differs among companies, the yen's current level is definitely a blow to anyone," SMBC Friend's Matsumura said. -By Yoshio Takahashi and Juro Osawa, Dow Jones Newswires; 813-6269-2791; yoshio.takahashi@dowjones.com; juro.osawa@dowjones.com (Daisuke Wakabayashi and Hiroyuki Kachi contributed to this article.) TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkbackAsia@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right not to publish reader comments.

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