More than 40 percent of major Japanese companies that have announced their results for the fiscal first half posted lower profits or fell into the red amid a weaker yen and rising material costs, SMBC Nikko Securities Inc. said Monday.
The results signaled that many companies have faced difficulties passing on higher energy and raw material costs, exacerbated significantly by the war in Ukraine, to consumers. The yen's slide against the U.S. dollar and other major currencies has contributed to further hikes in import prices.
Of 609 firms that released earnings for the six months that ended September by Friday, 266 showed their performance had declined, according to a tally compiled by the brokerage. By industry, 16 of 33 categories marked a similar trend, most notably the food and utilities sectors.
Combined net profit for manufacturers rose by just 1.5 percent from the same period last year to 6.52 trillion yen ($44 billion), with food producers posting a 54.0 percent fall.
Transport equipment makers such as automobile companies saw their net profits fall 16.2 percent, while the construction sector logged a 20.2 percent decline.
Bucking the trend, steelmakers booked a 21.3 percent rise as they passed on higher costs to clients, SMBC Nikko said.
Among services sectors, the land and air transportation industries returned to the black on recovering travel demand amid the easing of the coronavirus pandemic. Net profit for shipping firms doubled as economic activity picked up.
Utilities were the worst hit among all sectors. Power and gas companies fell into the red with a combined net loss of 434.96 billion yen on higher fuel costs.
Excluding utility firms, net profit among nonmanufacturers grew 55.8 percent to 5.80 trillion yen.
"The negative impact of a global economic slowdown may affect corporate earnings going forward. It will all come down to whether they can raise prices in a way that matches higher costs," Hikaru Yasuda, SMBC Nikko's chief equity strategist, said.
