TOKYO -- Manufacturers are driving aggregate earnings at Japan's listed companies toward a second consecutive annual decline, an analysis by Nikkei has found, risking the first back-to-back drop since the global financial crisis.
Combined profit at 972 listed businesses will slide 4% on a net basis during the year ending March 2020, based on projections from earnings reports released through Thursday. The forecasts trace a downturn of roughly 10% from the all-time high posted in fiscal 2017.
As Japanese businesses contend with the protracted U.S.-China trade war and a stalled global automobile market, no rebound appears likely soon.
The manufacturing industry's bottom line is poised to retreat by 12%, even as net profit for other Japanese companies looks to grow by 1% this fiscal year. The electrical machinery sector is headed for the biggest income decline, as client companies concerned by the trade frictions hold back on capital expenditures.
Fanuc, which makes factory robots, foresees profit tumbling 62%.
"In China, clients have taken a strong wait-and-see stance," said CEO Kenji Yamaguchi.
Nitto Denko projects a 22% drop in net profit based on sparse Chinese demand for smartphone manufacturing materials.
In the automotive sector, both carmakers and parts suppliers feel the squeeze. Mitsubishi Motors downgraded expected annual earnings to 5 billion yen ($45.8 million) on Wednesday, which represents a 96% free fall. Poor sales in China are depressing the bottom line.
Components maker MinebeaMitsumi forecasts a 14% decline in net profit to 52 billion yen, following a downward revision of 10 billion yen issued Thursday.
"The automobile slowdown in China is strong," Executive Officer Satoshi Yoneda said.
Mounting international competition is also eroding Japanese profits. Hitachi Metals expects a net loss for the first time in 11 years as the company faces a cutthroat price war with Chinese rivals.
Komatsu downgraded its guidance, projecting a 30% decline in net profit, as heavy machinery produced by Chinese competitors undercuts prices by more than 20%.
Kawasaki Heavy Industries forecasts a 9% decrease in net profit. Japanese shipbuilders are coping with mergers among major rivals in South Korea and China that are creating a gap in terms of scale and price competitiveness.