Japan Equity Strategy: Correction: FY2025 4Q Earnings Review: Earnings Outlooks Increasingly Polarized

Research evidence excerpt

Japan Equity Strategy: Correction: FY2025 4Q Earnings Review: Earnings Outlooks Increasingly Polarized

Idea

May 22, 2026 08:43 AM GMT

Morgan Stanley MUFG Securities Co., Ltd.+MJapan Equity Strategy | Japan Sho Nakazawa

Equity Strategist

Correction: FY2025 4Q Earnings Sho.Nakazawa@morganstanleymufg.comMasahiro Tran +81 3 6836-8926

Masahiro.Tran@morganstanleymufg.com +81 3 6836-8878

Review: Earnings Outlooks Kazuya Hayashi

Kazuya.Hayashi@morganstanleymufg.com +81 3 6836-8923

Increasingly Polarized Ukyo Haraguchi, CFA

Quantitative Strategist

Ukyo.Haraguchi@morganstanleymufg.com +81 3 6836-8925

FY2025 earnings were supported by interest rate normalization Kanji Ohi, CFA

and increased AI/data center-related investment, resulting in QuantitativeKanji.Ohi@morganstanleymufg.comStrategist +81 3 6836-8924

recurring profit growth of 11.7% YoY. FY2026 company guidance

implies 9% recurring profit growth. Earnings outlooks are

becoming increasingly polarized depending on sensitivity to AI/

domestic capex demand and raw material & fuel prices.

Key Takeaways

FY2025 marked the fifth consecutive year of revenue and profit growth: sales

rose 3.3% YoY, while recurring profit increased 11.7%.

FY2026 guidance calls for continued top- and bottom-line growth (sales: +5.4%

YoY; recurring profit: +9.0%), although the polarization of earnings outlooks

across sectors is becoming more pronounced.

Shareholder returns: Total shareholder payout (dividends plus share buybacks)

by TSE Prime companies for FY2025 reached a record high of ¥43.1trn.

Stock price reaction: Share prices tend to be more strongly affected than usual by

downside earnings risks implied by company guidance or expected dividend

levels.

We have corrected the third key takeaway. This article was originally published on