Experts Expect 80% of Listed Companies' Earnings
Forecasted to Exceed Company Projections
Record High Net Profit Expected for Fiscal Year 2023
Yen Depreciation Boosts Foreign Exchange Gains and Export Boom
Among 490 listed companies in Japan, 80% are expected to record earnings surprises in the 2023 fiscal year (April 1, 2023 ? March 31, 2024). This is analyzed as an effect of increased export profits due to the depreciation of the yen.
On the 5th, Nihon Keizai reported that analysts compiled the expected results for the 2023 fiscal year for 490 listed companies, forecasting a combined net profit of 39.85 trillion yen (approximately 359.76 trillion KRW). This is about 7% higher than the companies’ own forecast total of 37.27 trillion yen. It is also 150 billion yen more than the combined net profit of the previous year. Companies whose market net profit forecasts exceeded their own estimates accounted for 80% of the total.
The largest gap between market forecasts and company estimates was seen in Toyota Motor Corporation. Analysts predicted that Toyota would achieve a net profit of 3.43 trillion yen in the 2023 fiscal year. Toyota’s own forecasted net profit is 2.58 trillion yen, which is 850 billion yen less. Currently, Toyota has achieved 51% of its expected net profit for the first quarter (April to June) but is maintaining its previously announced forecast.
The background to the expected earnings surprises among listed companies is the weak yen. In the case of Toyota Motor Corporation and Subaru, the yen remained stronger than expected at 125?128 yen against the dollar in the first quarter, resulting in performance that matched initial forecasts. However, in the second quarter (July to September), the yen depreciated to the 140 yen range, and Nihon Keizai explained that if the weak yen continues at the current level, results will exceed company expectations.
Industries other than automobile companies also benefited from the weak yen. Nintendo predicted a 20% decline in performance compared to the previous year, but the market expected only a 2% decrease. The worldwide popularity of the new game "The Legend of Zelda: Tears of the Kingdom," combined with foreign exchange gains from the weak yen, is expected to reduce losses more than anticipated.
Yoshitaka Ishikayama, an analyst at Mizuho Securities, stated, "(Automobile manufacturers) generally maintained their annual performance plans as before, but seeing continued strong results, they may revise upward their forecasts at the half-year financial results announcement."
Experts forecast that corporate performance improvements due to the weak yen will continue in the second half of this year. Accordingly, profits of listed companies in the 2023 fiscal year are expected to increase by 6% compared to the previous year, marking the highest level for three consecutive years. Kenji Abe, chief strategist at Daiwa Securities, said, "Companies benefiting from the weak yen and the tourism industry will record stable performance," but added, "The economic downturn in China due to the real estate crisis and high interest rates in the United States will be major factors determining economic trends."
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