Yen Depreciation Effect 'Hits'... "Japanese Listed Companies' Net Profit Estimated Highest for 3 Consecutive Years"

Net Profit of 720 Japanese Listed Companies Approaches 293 Trillion Yen
"Concerns Over Negative Effects Like Consumer Slump if Yen Weakens Further"

According to a report by Asahi Shimbun on the 14th, the net profits of Japanese listed companies are estimated to have set record highs for three consecutive years. The record-breaking weak yen and product price increases are credited with driving corporate performance.

According to the report, SMBC Nikko Securities aggregated the net profits of 720 companies that announced their results for the fiscal year 2023 (April 2023 to March 2024) out of 1,292 companies with March fiscal year-ends included in the TOPIX (excluding financial industries). TOPIX is a major stock index representing the Japanese stock market alongside the Nikkei 225 index.

[Image source=AP Yonhap News]

The aggregation showed that these companies’ total net profits reached 33.5 trillion yen (approximately 293 trillion won), a 14.3% increase from the previous year. Operating profits during the same period rose 21% to 36.7 trillion yen, and sales grew 6% to 421.5 trillion yen.

In particular, Toyota Motor Corporation, Japan’s largest company by market capitalization, stood out in profit generation. Toyota’s operating profit for fiscal year 2023 nearly doubled from the previous year, increasing by 96.4% to 5.3529 trillion yen (approximately 47.0883 trillion won), marking the first time a Japanese company surpassed the 5 trillion yen mark. Net profit (4.9449 trillion yen) and sales (45.0953 trillion yen) also rose by 101% and 21%, respectively, setting all-time highs.

Asahi Shimbun attributed the strong performance of these Japanese companies largely to the “historical weakness of the yen, which inflated overseas business profits.” While a weak yen leads to increased costs for imported raw materials and energy, it also enhances the price competitiveness of export products and services. The recovery of domestic demand, supported by an increase in foreign tourists visiting Japan as the COVID-19 pandemic subsided, was also cited as a factor in improved performance.

An SMBC Nikko Securities official noted, “The positive effects of the weak yen are appearing,” but also warned, “If the yen weakens excessively, negative effects such as consumer downturn due to rising import prices may occur.” The yen-dollar exchange rate, which exceeded 160 yen per dollar for the first time in 34 years last month, is currently hovering around 156 yen. There are market speculations that the Japanese government intervened twice to defend against the yen’s sharp decline.

Meanwhile, Kazuo Ueda, Governor of the Bank of Japan (BOJ), stated at a lecture held in Tokyo on the 8th, “Currently, the weak yen is not significantly affecting the underlying inflation rate,” but added, “If prices rise or the risk of rising prices increases, it would be appropriate to adjust interest rates more quickly.”

This content was produced with the assistance of AI translation services.