Kagome Co., Ltd.

As Japanese companies announce their earnings, the weak yen is boosting performance, but there is growing caution about side effects such as higher raw material costs and sluggish consumption. Mitsubishi Electric CFO Fujimoto noted that the assumed exchange rate of 150 yen is stronger than the post-intervention level, leaving room for further upside, while Toyota Motor and Mitsui & Co. also raised their earnings forecasts, citing the weak yen as a tailwind. However, Denso and Sharp were forced to report profit declines or downward revisions due to soaring component costs, and Yoshinoya Holdings and Kagome also pointed to the impact of rising costs and slowing domestic sales. Companies have also voiced concerns about rapid currency fluctuations, with Itochu and Toyota calling for stable exchange rates. Regarding the appropriate level, CFOs at Mitsubishi Corporation and Mitsui & Co. expect the trend of a strong dollar and weak yen to continue, while Mitsubishi Electric CFO Fujimoto indicated that the company does not anticipate a return to the 120 yen range.

According to disclosures made on July 30, Nippon Steel Solutions raised its first-half net profit forecast by 6 percent, adding to its record-high profit outlook, and also increased its full-year forecast. Japan Tobacco raised its current-term net profit forecast by 13 percent, adding to its record-high profit outlook, and increased its dividend by 30 yen. Coca-Cola Bottlers Japan Holdings swung to a first-half net profit and announced a share buyback of up to 14 million shares, representing 8.6 percent of outstanding shares excluding treasury stock, with a maximum value of 400 billion yen. Elsewhere, Sekisui Jushi raised its current-term net profit forecast by 23 percent, increased its dividend by 18 yen, and expanded its share buyback amount from 2.7 billion yen to 3 billion yen. Mizuho Financial Group raised its current-term net profit forecast by 8 percent, adding to its record-high profit outlook, and expanded its share buyback program from the current 25 million shares and 100 billion yen to 35 million shares and 200 billion yen. On the other hand, negative factors also emerged, such as Nihon M&A Center Holdings reporting an 11 percent decline in ordinary profit for the April-June quarter, Kagome lowering its current-term net profit forecast by 22 percent, and Osaka Steel revising its first-half ordinary profit forecast to a loss and maintaining a previously undecided first-half dividend at zero.

Kagome on the 30th revised down its consolidated net profit forecast for the fiscal year ending December 2026 to 10.5 billion yen, a 29.1 percent decline from the previous year, from the earlier projection of 13.4 billion yen. The worsening situation in the Middle East is expected to have an impact of around 2.8 billion yen on business profit, while packaging-related expenses, raw material costs, and energy costs are seen rising mainly in the second half in the domestic processed food business and the international business. The recovery in sales volumes for some beverage products that saw price hikes in Japan in February falling short of assumptions is also weighing on results.