Major Japanese companies are expected to see a 4.0 percent rise in combined net profit to 42.9 trillion yen ($307 billion) this fiscal year, on course to log a record profit for the third consecutive year led by the auto sector, according to the latest tally by a securities house.
The projected profit for the current fiscal year through March 2024 will eclipse an aggregated net profit of 41.3 trillion yen in the last fiscal year, according to SMBC Nikko Securities' data on earnings forecasts at about 1,400 listed companies on the Tokyo stock market.
Among the market's 33 sectors, net profit in the transportation equipment sector, which includes automakers, is forecast to grow 11.4 percent in fiscal 2023 as a chip supply crunch eases and pent-up demand in the post-pandemic period revs up vehicle production.
Toyota Motor Corp. expects net profit to rise 5.2 percent to 2.58 trillion yen this fiscal year, reversing a 14 percent drop last fiscal year.
Honda Motor Co. and Nissan Motor Co. are also boosting output, projecting their net profit to jump 15.1 percent and 42 percent, respectively, this business year.
"Automakers are making a strong comeback," Hikaru Yasuda, equity strategist at SMBC Nikko, said. "It's going to be manufacturers like them that will push up the total profit of Japanese companies."
The tourism industry is also expected to drive growth at Japan Inc., benefiting from the removal of COVID-19 border control measures in Japan.
A surge in inbound visitors means more spending by tourists helping to rejuvenate domestic retailers, hotel operators and transportation companies.
Net profit in the air transportation industry is seen rising 9.0 percent in the current fiscal year, according to the SMBC Nikko data.
Japan Airlines Co. projects a 59.8 percent surge in net profit in fiscal 2023 after returning to the black for the first time in three years the previous year, counting on a sharp increase in international flight passengers.
Still, some business leaders have warned of risk factors ahead, such as a potential recession in the United States.
"We are not very optimistic as many overseas authorities are accelerating monetary tightening and the world economy is moving toward economic decoupling," Sony Group Corp. President Hiroki Totoki said at a press conference in April.
Sony Group expects its net profit to fall 10.4 percent, with a sales fall of 0.3 percent for the fiscal year ending March 2024.