Japan Equity Strategy FY2025 earnings wrap: Stronger-than-expected FY2025 results driven by AI semiconductors and banks

Research evidence excerpt

Japan Equity Strategy FY2025 earnings wrap: Stronger-than-expected FY2025 results driven by AI semiconductors and banks

Rie Nishihara AC Global Markets Strategy

(81-3) 6736-8629 18 May 2026 J P M O R G A N

rie.nishihara@jpmorgan.com

also generally held up well. In contrast, earnings were weak in autos and basic materials

& chemicals due to effects from US tariffs and higher costs, and in transportation &

logistics and electric power & gas due to impact from high crude oil prices. The operating

profit margin rose further in FY2025 to reach a new record high since 2006 (Figure 7TOPIXactualSPS,EPS,andnetprofitmargin).

• FY2026 guidance is for 12% profit growth, driven by electric equipment,

nonferrous metals, materials & chemicals and banks: TSE Prime companies’ FY2026

guidance is solid at YoY growth of 4.9% in sales, 17.2% in operating profit, and 12.0%

in net profit (including Kioxia Holdings’ quarterly forecast on an annualized basis). Main

drivers of profit growth include electric equipment, nonferrous metals, basic materials &

chemicals and banks. In contrast, the Middle East conflict and high crude oil prices weigh

heavily on guidance set by the auto sector among external demand-relateds, and sectors

including food, transportation & logistics, construction & materials and electric power

& gas among domestic demand-relateds. Impact from high crude oil prices on corporate

guidance is generally consistent with the overall index and among individual sectors

based on our estimates (report). See Figure 6TOPIX50companieswithstrong/weakFY2026profitguidance for a list of companies with strong and weak

operating profit guidance. The average corporate USD/JPY assumption for FY2026 is

¥151.8, so Japanese corporates expect the yen to strengthen versus the current level of