Japan firms' net profit falls 10.2% in April-June, 1st drop in 3 yrs
Net profit in the manufacturing sector fell 22.7 percent, with transport machinery makers including automakers tumbling 42.1 percent, according to SMBC Nikko Securities Inc. which released the survey as the earnings report season for the quarter came into full swing.
Based on earnings forecasts by the companies and analysts, net profit for the business year ending March 2026 is also expected to slip for the first time in six years, it said.
SMBC Nikko used earnings reports released as of Thursday by 823 firms, which account for about 70 percent of the companies listed on the top-tier Prime Market whose fiscal year ends in March.
"Automakers stand out as a sector when looking at the effects of the tariffs" imposed by U.S. President Donald Trump, said Hikaru Yasuda, SMBC Nikko's chief equity strategist, adding that the sector was also hit by weaker domestic sales.
The appreciation of the yen against the U.S. dollar compared to the previous year also factored in the fall in the manufacturing industries such as the machinery sector where the combined net profit dropped 10.7 percent.
The iron and steel sector logged red ink as it was pressured by inexpensive products from China.
Meanwhile, an artificial intelligence boom led to a soar in profits in the chip sector, with electric appliance firms seeing an 18.2 percent climb.
Net profit of construction companies rose 10.6 percent, with some of them benefitting from large contracts to build chip factories.
The real estate sector saw a 30.4 percent jump in their net profit on the back of a continued rise in luxury condominium sales and rent hikes for office spaces.
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