Image Credits - Nikkei Asia
For the third consecutive year, the Tokyo Stock Exchange (TSE) anticipates hitting a record high in combined profits, fueled by a combination of factors including a weak yen, price hikes, and the resurgence of economic activities post-pandemic.
Automakers such as Isuzu Motors Ltd. and Toyota Motor Corp. have reported impressive financial results, attributing their success to favourable exchange rates and strong sales abroad. Isuzu Motors saw its final profit soar to a record ¥176.4 billion, while Toyota’s net profit nearly doubled to nearly ¥5 trillion.
According to data compiled by SMBC Nikko Securities Inc., 919 companies listed on the Tokyo Stock Price Index (TOPIX) have reported a collective net profit of ¥36 trillion, marking a notable 14% increase from the previous fiscal year. Notably, one-third of these companies have achieved record profits.
The weak yen has played a pivotal role in bolstering overall company performance, offsetting challenges associated with price hikes. Mitsubishi Electric Corp. and Nissin Foods Holdings Co. raised prices for their products, resulting in substantial increases in net profits.
Moreover, the resumption of post-pandemic economic activities has further contributed to the positive momentum. Companies such as East Japan Railway Co. and ANA Holdings Inc. have witnessed significant boosts in revenues as tourism rebounds.
In response to these record profits, companies have begun investing in wage hikes and supporting business partners. The average wage hike reached a 32-year high, according to the Japanese Trade Union Confederation (Rengo).
However, amid the optimism, concerns loom over exchange rate risks and external economic factors. Some companies, such as S.T. Corp., have faced challenges due to the depreciation of the yen. Additionally, uncertainties surrounding the U.S. economy, including the recent shortfall in employment figures and the upcoming presidential election, have led to cautious projections for the fiscal year ending March 2025.
As companies navigate these challenges, maintaining a balance between profitability and resilience against external pressures remains paramount for sustaining Japan’s economic momentum.