Key Facts
• Q2 2025 marks the first profit decline in three quarters for public companies.
• Net profit dropped 10.2% year-on-year to ¥11.28 trillion.
• Automotive sector profits fell by 40%, heavily impacted by U.S. tariffs.
• Exchange rate fluctuations, including yen appreciation, further pressured earnings.
• Electricity and gas sectors turned to losses, with Tokyo Electric Power posting an ¥857.6 billion deficit.
• Steel sector also faced losses due to acquisition costs and declining steel prices.
• SoftBank Group’s improved performance boosted overall net profit by 4.5%.
• AI and semiconductor demand supported strong performance in the electronics sector.
• Full-year net profit forecast for FY2026 is ¥50.19 trillion, a 6.9% decline from the previous year.
• U.S.-Japan negotiations may reduce auto tariffs, but challenges for the automotive sector persist.
Summary
Public companies in Japan experienced a 10.2% drop in net profit for Q2 2025, marking the first decline in three quarters. The automotive sector, hit hard by U.S. tariffs, saw profits plummet by 40%, while yen appreciation added further strain. Electricity and gas sectors turned to losses, with Tokyo Electric Power reporting a significant ¥857.6 billion deficit. The steel industry also struggled due to acquisition costs and falling steel prices. However, SoftBank Group’s improved performance and strong demand for AI and semiconductors in the electronics sector provided some relief. The full-year net profit forecast for FY2026 is ¥50.19 trillion, a 6.9% decrease from the previous year. Despite potential tariff reductions from U.S.-Japan negotiations, challenges for the automotive sector remain significant.
