Two in Three Japanese Companies’ Profits Hit by the Weak Yen

Listed companies’ financial statements for the fiscal year ending in March 2024 showed that a number of companies had record high profits, boosted by the weak yen. However, the yen’s value has also led to a rise in prices for imported goods and personal consumption remains in a slump.

Teikoku Databank conducted a survey looking at the impact of the weak yen on 1,046 companies from May 10 through 15, revealing that 16.0% had seen a “positive effect” on sales, 35.0% had experienced a “negative effect,” and 49.0% reported “no change.” In contrast, for profits, there had been a “positive effect” for 7.7%, a “negative effect” for 63.9%, and “no change” for 28.5%, meaning profits at two out of three companies were negatively impacted. Further, 31.7% saw negative effects on both sales and profits.

One specialty goods retailer commented that “the weak yen has led to the prices of imported watches and jewelry increasing across the board. Prices have skyrocketed so consumer confidence has slumped and sales have fallen,” while a wholesaler of building materials, furniture, ceramics, and stone products stated “when we passed on the increase in the purchasing price to the selling price, it dented consumers’ desire to buy the products.” The reality is that, even though it is impossible to get around increases in raw material prices due to the weak yen, it is difficult for each company to reflect those increases in their products and services.

When asked what they felt was a reasonable exchange rate for their company, the most common response, with 28.9%, was “¥120 to ¥129,” followed by 21.2% saying “¥110 to ¥119.” Half of all the companies believed the US dollar rate should be in the range of ¥110 to ¥129, significantly different to the current exchange rate that is hovering above ¥150.

(Translated from Japanese. Banner photo © Pixta.)