日本制造商因提价和日元疲软上调利润预期Japan manufacturers lift profit outlooks on price hikes, weak yen

TOKYO -- Japan's listed manufacturers are delivering strong earnings growth, with nearly half raising net profit forecasts for the fiscal year ending March 2027.

A combination of factors, including successful price hikes, robust artificial intelligence investment and a weaker yen, supported the upward revisions but concerns have emerged that spending by U.S. tech companies may begin to falter.

A Nikkei analysis covered about 500 manufacturing and non-manufacturing companies listed on the Tokyo Stock Exchange's Prime market with fiscal years ending in March that had released first-half earnings results by Friday, excluding listed subsidiaries. Among them, Nikkei looked at companies that since October had revised earnings forecasts for the fiscal year ending March 2027.

Of the 239 manufacturers surveyed, 112, or 47%, raised net profit forecasts. By sector, electrical machinery accounted for 32 upward revisions, chemicals for 27 and machinery makers for 13.

Manufacturers had lagged nonmanufacturers in recent years because of the U.S. tariffs, deflationary pressures coming from China and other factors.

Chemical maker Ube raised its net profit forecast by 1 billion yen ($6.3 million) after price increases in the polymers and chemicals segment beat expectations.

"We're in a position to pass through costs, including higher raw-material prices," Chief Financial Officer Hirotaka Ishikawa said.

Materials group Asahi Kasei raised its net profit forecast by 13 billion yen to 173 billion yen, up 9% from the previous fiscal year, reflecting stronger-than-expected sales of materials used in advanced AI semiconductors. The upward revision would allow the company to surpass its previous 170.2 billion yen record profit set in the year ended March 2018.

Price hike benefits are spreading to midsize companies as well. Adhesives maker Konishi lifted its net profit outlook by 1.3 billion yen thanks to price increases implemented to offset rising raw material costs. Plastics maker Riken Technos also upgraded its forecast after passing on costs to customers.

Many companies benefited from economic growth in the U.S., fueled by investment linked to AI infrastructure.

Komatsu is capturing demand from U.S. data center construction projects while the weaker yen is boosting earnings. Nippon Steel's U.S. subsidiary, U.S. Steel, has increased steel shipments for data centers. Both companies raised their net profit forecasts.

Toyota Motor posted the largest upward revision, boosting its net profit outlook by 320 billion yen. Strong sales of hybrid vehicles in the U.S. are driving earnings growth as consumers facing high gasoline prices increasingly favor fuel-efficient models.

Some companies are also benefiting from restructuring. Panasonic Holdings has strengthened profitability through measures including a workforce reduction of 12,000 employees globally by the fiscal year ended March 2026 and the sale of its European auto parts business. Strong demand for substrate materials used in AI servers are also supporting earnings, prompting the company to raise its profit forecast and target a record profit for the first time in three years.

Among nonmanufacturers, major trading houses benefiting from high commodity prices and banks enjoying wider lending margins because of rising interest rates stood out.

Around the time of April-June earnings announcements, listed companies were expected to generate combined net profit of 63.4 trillion yen for the year, up 14% annually. Upward revisions announced since October total 2.4 trillion yen, suggesting further upside potential. But concerns are mounting.

U.S. tech companies competing on AI have financed massive investments in data centers through bond sales and equity issuances, driving earnings growth for semiconductor and materials suppliers. Their cash outflows have ballooned, however, prompting investors concerns about the sustainability of AI spending Political developments could also pose challenges. Following the U.S. midterm elections, Democrats gained control of both chambers of Congress and won governorships in states including Texas. Some Democratic lawmakers have criticized data center expansion because of the sector's electricity consumption.

Currency trends are another concern. The weaker yen has been a major profit driver for exporters, but the tailwind is fading. Toyota on Thursday revised its assumed exchange rate to 157 yen per dollar, 3 yen stronger than its previous estimate, bringing it largely in line with current market levels and reducing the potential earnings boost from currency movements.

While no single negative factor has emerged that would undermine the broader earnings growth trend, executives are increasingly on guard.

At an earnings briefing Wednesday, Itochu President Keita Ishii said the outlook for interest rates and foreign exchange markets following the U.S. midterm elections had become difficult to predict. "We have concerns about the U.S., which has been the main driver of the global economy," he said.

Tomochika Kitaoka, chief Japan equity strategist at Nomura Securities, said, "With uncertainty about the external environment growing, companies will need to strengthen procurement capabilities and production systems while driving earnings by both passing on prices and achieving higher sales volumes."