TOKYO - Japanese companies delivered stronger-than-expected earnings for the April-June quarter, with artificial intelligence-related demand lifting a broad range of businesses while instability in the Middle East and higher resource prices emerged as key headwinds.
An analysis covering 225 companies, including those whose fiscal years do not end in March, showed that roughly 75% reported higher sales and profits or returned to profitability. More than 90% recorded increased sales, indicating broadly favorable business conditions.
The strength was even more pronounced when looking at changes in profits. Companies whose earnings doubled or increased threefold or fourfold accounted for about one-fifth of the total.
Results were partly helped by a low comparison base following disruption caused by the tariff shock a year earlier, but the overall performance remained exceptionally strong even after taking that factor into account.
When the percentage changes in earnings at individual companies were averaged rather than calculating their combined profits, earnings were about 2.4 times the year-earlier level. Some companies recorded extremely large increases, including gains of around 46 times.
The strong earnings also provided support for the sharp rise in Japanese equities during the April-June period. The Nikkei Stock Average climbed about 35% and reached the 70,000 range during the quarter. While some investors described the advance as a bubble, the scale of the increase in corporate earnings suggested that share prices may in fact have lagged behind the improvement in fundamentals.
AI and semiconductor-related demand was a major driver of the strong results.
Nearly 30% of the companies covered in the analysis had already revised their forecasts upward, highlighting the strength of the earnings environment.
Fujikura stood out as one example. The company recorded earnings growth of about 2.1 times and had already raised its outlook twice by the first quarter. The repeated revisions illustrated how even companies positioned at the center of the AI boom have underestimated the strength of demand.
Past patterns also suggest that companies making multiple upward revisions are relatively likely to raise their earnings forecasts again later in the fiscal year.
The benefits of AI are also spreading well beyond companies traditionally regarded as semiconductor or technology stocks.
Mitsubishi Heavy Industries provided a notable example. While the company is often associated with areas such as space, defense and shipbuilding, gas turbines emerged as an important contributor to its latest results.
Rapid expansion of AI-related data centers is pushing up electricity demand, increasing interest in efficient power generation. Gas turbines have consequently attracted stronger demand around the world, showing how the economic effects of the AI boom are reaching into heavy industry and power-generation equipment.
Middle East developments, by contrast, have generally presented a negative factor for corporate earnings. Continued instability in the region, together with higher resource prices, has created pressure on companies across a range of industries.
However, the impact has not been uniformly negative, with some companies benefiting from market conditions associated with higher resource prices and geopolitical uncertainty.
Source: テレ東BIZ
