A Nomura Securities strategist analyzes the first half of Japan’s earnings season, covering the impact of the situation in the Middle East, companies’ pricing power, trends in cash and cash equivalents and shareholder returns, as well as FY2026 plans.
FY2025 results are already in for approximately 35% of stocks by market capitalization. Across all industries, revenue rose 3.1% and ordinary profit increased 8.9%, with 67% of companies expecting ordinary profit growth. Company forecasts for FY2026 call for 4.6% revenue growth and 1.9% ordinary profit growth. Although 69% of companies expect ordinary profit growth in their initial guidance, most are forecasting low-single-digit increases.
The extent to which the situation in the Middle East is reflected in forecasts varies by company, and cases in which ordinary profit falls below consensus account for as much as 76% of the total. At the same time, some companies are emphasizing their willingness to pass higher costs through to prices while indicating that uncertainty remains at present. Reports indicate that 43% of companies expect to increase dividends in their FY2026 forecasts, while approximately 10% plan to conduct share buybacks.
On a quarterly basis, from January to March 2026, cost of sales and selling, general and administrative expenses increased 5–6% year on year alongside revenue. Attention is expected to remain focused on rising costs and companies’ ability to pass them through to prices. The analysis concludes that many companies are using conservative FX assumptions of ¥150–152 per dollar and ¥178–180 per euro.