A third of Japan firms likely to miss H1 forecasts, Reuters poll shows

Nippon Yusen Kabushiki Kaisha

10/10/2024 24:00

* 
      Some 36% of firms to fall short of own forecasts for
April-Sept
    

        * 
      Around 70% of firms see dollar/yen in 140-150 range in
March
    

        * 
      Japan firms unruffled by U.S. concerns over U.S. Steel
deal     
    

  
    By Kiyoshi Takenaka
       TOKYO, Oct 10 (Reuters) - More than a third of Japanese
companies are likely to miss their earnings projections for the
first half of the business year that commenced in April due to
slow sales and increased costs, a Reuters survey showed on
Thursday.
    The survey, conducted by Nikkei Research from Sept. 25 to
Oct. 4, found that 36% of the polled companies expected they
would not meet their original six-month estimates to September,
while 18% anticipated exceeding their initial predictions.
    Some 45% said they were on track to hit their targets. The
survey reached 506 companies, with 241 responding.
    Most Japanese firms closed their books on Sept. 30 for the
financial results of the first six months of their business
year. Earnings announcements for April to September are expected
to get into full swing toward the end of this month.
    In the transportation equipment sector, primarily consisting
of car-related companies, 50% estimated their half-year earnings
would underperform forecasts, while 14% said they expected to
exceed their own estimates.
        In July, Nissan Motor  7201.T  cut its annual operating
profit forecast by 17% and lowered its retail sales forecast by
some 50,000 units to 3.65 million vehicles, citing
weaker-than-expected sales in the United States and China.      
    Bucking the trend was the transportation sector, in which
40% of respondents saw their half-year earnings beating their
own estimates, versus 35% of the firms that would likely miss
their initial forecasts. 
    Nippon Yusen  9101.T  and other shippers in July raised
their annual outlook after armed conflicts in the Middle East
prompted shipping firms to reroute vessels away from the Red Sea
and use the roundabout Cape of Good Hope route, tightening
container ship supply and driving freight rates higher.       
    For the second half of the current business year, which
started on Oct. 1, 58% of respondents anticipated meeting their
initial earnings forecasts, while 34% predicted they would fall
short of their original projections.
    The survey also found that 70% of respondents expected the
Japanese yen  JPY=  to trade between 140 and 150 yen per dollar
by the end of the current business year on March 31, with 21%
predicting a range of 130-140 yen.
    On Oct. 2, while the survey was being conducted, Japanese
Prime Minister Shigeru Ishiba surprised markets by saying the
economy was not ready for further rate hikes, sending the yen to
a six-week low of 147.25 yen to the dollar the next day.
    Asked what should be done in response to excessive foreign
exchange fluctuations, 45% suggested implementing monetary
easing or tightening while 33% advocated for government market
intervention. 
    "Besides a difference in interest rates among countries,
weakness in the Japanese economy is causing weakness in the yen.
We need policy steps that strengthen the Japanese economy," a
manager at a chemical company wrote in the survey. 
    Regarding Nippon Steel's  5401.T  $14.9 billion bid for U.S.
Steel  X.N , 46% of surveyed firms said the Biden
administration's concern about potential national security risks
had not altered their stance on U.S. investments.
    The remaining 54% said they were not engaged in investments
in the United States, with none stating that U.S. security
concerns over the proposed deal had affected their investment
strategies.
    As for measures to cope with a growing number of
cross-border acquisitions targeting Japanese companies, 44% were
striving to boost corporate value, while 21% were not taking any
specific steps and 32% did not see themselves as M&A targets,
the survey found.
    

 (Reporting by Kiyoshi Takenaka; Editing by Jacqueline Wong)
 ((kiyoshi.takenaka@thomsonreuters.com; +81 3 4563 2788;))