Major Japanese companies are expected to log a record combined net profit for the fiscal first half driven by carmakers on the back of a weak yen, with a post-COVID recovery in activity also providing tailwinds for services and other sectors, according to a tally by a securities house.
The aggregate net profit of 819 firms that released earnings for the six months ended September by Wednesday increased 12.2 percent to 17.87 trillion yen ($118 billion) from the same period last year, according to data from SMBC Nikko Securities Inc.
The projected profit for the current fiscal year through March 2024 is also on course to hit a record high, providing a strong argument for businesses to raise wages during next year's "shunto" spring negotiations between management and labor unions.
But the figure, representing only around 57 percent of the companies that will make up the final tally, may be pulled down as major firms release earnings for the first half. SoftBank Group Corp. said Thursday it posted a net loss of 1.41 trillion yen for the period.
Combined net profit for manufacturers rose 11.8 percent to 9.13 trillion yen, with transportation equipment makers such as automakers seeing their net profits soar 90.7 percent to 3.56 trillion as the easing of a global chip supply crunch boosted production.
Food producers also posted an 81.8 percent increase in net profit to 237.7 billion yen as they passed on higher raw material costs to consumers.
Excluding financial firms, net profit among nonmanufacturers grew 11.8 percent to 8.26 trillion yen.
The land and air transportation industries saw notable increases thanks to recovering travel demand and inbound tourism amid the easing of the coronavirus pandemic, with the latter surging almost nine-fold.
Power and gas companies returned to the black as rate increases helped support their bottom lines.
Meanwhile, shipping firms saw their profits sag 81.7 percent amid a slowdown in China's economy, while wholesalers experienced an 18.6 percent decline.
"We can expect further business expansion, particularly among manufacturers, in the coming years, but risks may emerge if the Chinese economy continues to slow or if the yen appreciates significantly," said Hikaru Yasuda, SMBC Nikko's chief equity strategist.
