The escalating tensions in the Middle East are weighing on corporate earnings through soaring raw material and energy prices and higher logistics costs. Shipment delays have also occurred, prompting companies to accelerate efforts to pass on costs, reduce expenses, diversify procurement sources and secure alternative products.
Escalating tensions in the Middle East are affecting corporate earnings. In addition to soaring raw material and energy prices, disruptions to maritime transport and shortages of shipping capacity are causing shipment delays, with several companies expecting an impact on their full-year results. Against this backdrop, companies are increasingly required to strengthen measures including not only passing on costs but also diversifying procurement sources and building up inventories.
Toyo Tire expects the deteriorating situation in the Middle East to have a negative impact of approximately ¥15.9 billion on operating profit for the fiscal year ending December 2026. Raw material-related costs are expected to account for ¥14.3 billion of the impact, while higher maritime transport and energy costs are each expected to have an impact of approximately ¥800 million.
Lion expects higher raw material costs to reduce business profit by ¥7 billion for the fiscal year ending December 2026, and plans to offset the increase through measures including passing on costs, reviewing product formulations and revising its procurement strategy.
DMG MORI has experienced shipment delays to the Middle East and Gulf region due to the closure of the Strait of Hormuz. Sumitomo Chemical is increasing procurement from outside the Middle East. Although uncertainty remains over the continuation of operations, the company is making progress in securing supplies at present.