By Yusuke Fukuhara / Yomiuri Shimbun Staff Writer

The combined net profit of companies listed on the Tokyo Stock Exchange for the April-June period decreased year on year by 22.4% to 8.187 trillion yen, marking the first decline in five years for that quarter.

As the impact of the high tariff policy of U.S. President Donald Trump's administration has become tangible, it is possible that the total net profit for the full fiscal year ending March 2026 will decrease. This would also be for the first time in five years.

Announcements of financial results by TSE-listed companies for April-June peaked last Friday.

Among companies listed on the Tokyo Stock Price Index (TOPIX), excluding financial services companies and SoftBank Group Corp., 736 companies, or about 70%, had already released their earnings reports for the quarter by Thursday. SMBC Nikko Securities Inc. compiled the data based on these reports.

Automobiles, machinery firms hit hard

Declines in net profit were notable among companies in sectors such as "transportation equipment," which includes the automobile industry, and "machinery," as they are particularly vulnerable to the impact of U.S. tariffs.

Mitsubishi Motors Corp. reported a 97.5% decline year on year to 700 million yen in its consolidated net profit for the quarter. "The sales environment was more challenging than ever before," said Executive Vice President Kentaro Matsuoka at a press conference on the financial results held in late July. The additional tariffs on automobiles imposed by the United States in April affected sales, and a stronger yen also weighed on the company's performance. All seven major Japanese automakers either reported net losses or lower net profits compared to the same period last year.

"The impact of tariffs on corporate performance will persist. It is highly likely negative growth will be seen (in the combined net profit) this fiscal year," said Hikaru Yasuda at SMBC Nikko Securities.

Entertainment industry upbeat

Companies in the entertainment industry, including video game businesses, reported strong results.

Nintendo Co. saw its net sales increased 2.3 times to 572.3 billion yen, and its net profit rose by 19% to 96 billion yen. The results are attributed to strong sales of its new Switch 2 video game console and its lineup of games. Capcom Co. logged a net profit of 17.2 billion yen, an increase of more than 70%.

The impact of U.S. tariff policy on entertainment companies is less due to the practice among World Trade Organization member countries of not imposing customs duties on electronic transmissions. In the Tokyo stock market, expectations for game makers rose, with such moves as Nintendo share prices hitting new highs.

Rises in net profits were also seen among nonmanufacturing industries that rely on domestic demand, such as real estate and construction. However, factors such as Tokyo Electric Power Company Holdings Inc. logging a massive net loss weighed on the overall performance of the nonmanufacturing sector.

Full-year forecasts divided

In forecasting the full-year performance through March, companies had different views on the impact of the so-called reciprocal tariffs imposed by the United States.

Sony Group Corp. estimated in May that U.S. tariffs would have a negative impact of 100 billion yen on its operating income. But the company has now reduced its estimate to 70 billion based on the tariff rates agreed by the Japanese and U.S. governments.

According to SMBC Nikko Securities' data, while 24 companies among those that had announced their financial results by Thursday revised downward their full-year net profit forecasts, 51 companies revised them upward.

Still, uncertainty remains regarding U.S. tariff policy. "The tariff issue has been settled for now, but the future situation remains unpredictable," said Mitsubishi Corp. Executive Vice President Yuzo Nouchi, expressing an intention to continue to keep a close eye on the situation. The company kept its full-year outlook unchanged.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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August 12, 2025 23:44 ET (03:44 GMT)

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