TOKYO -- Japanese companies are upgrading fiscal-year earnings forecasts at the highest rate in four years, as brisk demand from overseas improves prospects for manufacturers.
By Thursday, 45% of companies closing their books in March had announced results for the April-June quarter. And 71 of those used earnings presentations to increase net profit forecasts for the year ending next March, compared with predictions made at the beginning of the fiscal year. Just six companies have downgraded their outlooks.
Mitsubishi UFJ Morgan Stanley Securities reckons that 7.8% of companies on the Tokyo Stock Exchange's first section closing their books in March upgraded their full-year forecasts in quarterly earnings reports -- the highest share since April-June of 2013. The number downgrading was a mere 0.6%, the lowest such figure recorded in data going back to 2004.
In 2013, the Bank of Japan was largely responsible for the improvement: monetary easing sent the yen from between 90 and 95 to the dollar to more than 100 against the greenback, and companies rejoiced. This time, broader growth in the global economy seems to be the driving factor. Companies relying on foreign demand -- primarily manufacturers -- have sold more units for higher prices than initially anticipated, and have lifted their full-year estimates accordingly.
Mitsubishi Electric now sees net profit growing 12% to 235 billion yen ($2.13 billion) for fiscal 2017, up from 215 billion yen forecast initially, due to increased sales of factory automation equipment in Asia. Fanuc anticipates a 3% climb in net profit to 131.5 billion yen, as opposed to the 8% drop predicted at the beginning of the fiscal year, amid higher-than-expected demand in China for its automated machine tool systems and industrial robots.
Honda Motor now expects net profit to decline 12% to 545 billion yen -- 15 billion yen higher than its initial projection. Automobile sales are predicted to rebound in North America starting in July. The carmaker hopes for record sales there as it bolsters supply of such vehicles as the new-model Accord, according to Executive Vice President Seiji Kuraishi, and another earnings upgrade could be on the table if sales beat projections.
Furukawa Electric forecasts net profit rising 45% to 25.5 billion yen -- 5.5 billion yen above its previous prediction. Demand for the electrical equipment maker's optical fiber is growing worldwide due to a boom in data transmission.
Collectively, Japan's listed companies are seen logging record net profit for the second year running. In the three months through June, listed firms earned 29% of their anticipated full-year totals -- compared with 23% a year earlier and the 25% that would ordinarily be expected. "The world economy is coming out of a stall, and the earnings environment is improving for companies relying on external demand," said Masashi Akutsu of SMBC Nikko Securities.