Ten of Japan’s biggest companies are likely to pocket an extra 1.4 trillion yen ($9.3 billion) in profits this fiscal year if the yen continues to hover around the 150 mark to the dollar, a Bloomberg calculation shows.
The calculation is based on figures from 10 of the Japan’s 30 largest firms by market capitalization that specify the impact of exchange-rate movements on their earnings.
Many of Japan’s largest businesses are exporters that benefit from a weaker yen. The biggest beneficiary among the 10 companies from a weaker currency is Toyota Motor Corp. The automaker says it gains 45 billion yen in operating profit for every 1 yen of additional weakness against the dollar.
The companies’ latest expected exchange rates for this fiscal year were between 125 and 135 yen to the dollar, projections that haven’t factored in the yen weakening of recent months. This week the yen renewed year-to-date lows against the dollar, and is around levels where authorities intervened to prop up the currency last fall.
To calculate the expected additional profits stemming from yen weakness, the actual dollar-yen exchange rate from the beginning of the fiscal year to Oct. 25 was used. The rest of the year’s exchange rate through the end of March was assumed to remain at 150 yen to the greenback.
As firms revise up their earnings forecasts, the extra profits could be filtered through to shareholder returns and employee salaries.
At the other end of the spectrum, protracted yen weakness will likely continue to hit importer earnings, as a variety of costs rise. Through September this year, 38 firms have already filed for bankruptcy due to the weak yen, according to Tokyo Shoko Research Ltd. Dairy and other companies went under due to the soaring cost of imported feed and other raw materials.
For Sony Group Corp., which has a diverse range of businesses, the weak yen impacts each part of the group in different ways. While the games and electronics sections of the company has benefited from the slumping yen, semiconductors and businesses largely based in the US such as film production have suffered.
--With assistance from Yuki Furukawa.
