Nomura : Outlook for FY25–26 corporate earnings

News Release

Outlook for FY25-26 corporate earnings

Quarterly Update

6 March 2026

For inquiries:

Market Strategy Research Dept Equity Research Dept

Nomura Securities Co., Ltd.

Contents

Summary and major assumptions 3

Contributions to recurring profit growth by sector 5

Revisions to recurring profit estimates (versus 1 September) 7

Revision index for the Russell/Nomura Large Cap Index 10

Reference

Russell/Nomura Large Cap Index: earnings indicators 11

Recurring profits by sector 13

Percentage change in quarterly sales and profits 14

Valuation indicators 15

What are the Russell/Nomura Japan Equity Indexes? 16

Summary and major assumptions

Our analysts forecast full-year sales up 1.7% and recurring profits up 5.6% in FY25

We have aggregated FY25-26 earnings forecasts by Nomura analysts for constituents of the Russell/Nomura Large Cap Index (forecasts for sales and operating profits exclude financials, same basis hereafter). Our analysts forecast FY25 sales growth of 1.7% y-y, operating profit growth of 1.7%, recurring profit growth of 5.6%, and after-tax profit growth of 3.8%. Versus the previous such exercise conducted on 1 December, they have raised their sales growth forecast by 0.9ppt, their operating profit growth forecast by 0.6ppt, their recurring profit growth forecast by 2.2ppt, and their after-tax profit growth forecast by 0.8ppt.

Initially, our analysts had expected recurring profits at major companies to fall y-y in FY25 owing to the new cost factor of additional US tariffs. However, subsequent yen depreciation prompted them to change their minds on 1 December and forecast recurring profit growth. They now expect overall recurring profits at major companies to rise even excluding SoftBank Group, whose investment fund business is likely to register a sharp rise in profits.

For FY26 our analysts now forecast sales growth of 4.3% and sustained recurring profit growth with a rise of 10.2%

Our analysts forecast FY26 sales growth of 4.3% y-y, operating profit growth of 19.2%, recurring profit growth of 10.2%, and after-tax profit growth of 12.5%. Versus the previous such exercise, they have raised their sales growth forecast by 1.2ppt, their operating profit growth forecast by 5.4ppt, their recurring profit growth forecast by 3.8ppt, and their after-tax profit growth forecast by 6.1ppt. These upward revisions are larger than they may seem at first glance, given the aforementioned upward revisions to FY25 forecasts that form the basis for y-y comparisons. Our analysts envision solid growth in the global economy in FY26. One change from FY25 forecasts is that they expect the impact of US tariffs to fade in FY26. Our analysts expect recurring profit growth in FY26 to be driven in large part by the semiconductor industry in the electrical machinery & precision equipment sector, but they also expect recurring profit growth in many other sectors, particularly automobiles and financials. Our analysts forecast double-digit recurring profit growth at major companies in general for the first time since FY23.

Revision index shows upward revisions outnumbering downward revisions, particularly in manufacturing sectors

The Revision Index (RI) for the Russell/Nomura Large Cap Index (which shows the difference between the percentage of companies subject to upward revisions and the percentage of companies subject to downward revisions) is +28.4% for March 2026 (based on changes to FY25 recurring profit forecasts over 2 December through 3 March). The upward revisions are mainly for manufacturers, partly because USD/JPY assumptions have been revised in the direction of a weaker yen.

Our analysts forecast dividend payout ratio of 39.7% in FY25, expect 75.1% of companies to raise or restore their dividends

Our analysts expect after-tax profits to be only slightly higher in FY25 than in FY24, but total dividends to be around 10% higher. The projected dividend payout ratio is 39.7%, broadly unchanged from 40.0% in the previous such exercise, and up from 36.2% in FY24. Our analysts expect 75.1% of companies to raise or resume their dividends, up from 73.2% last time around. They expect many major companies to remain committed to strengthening their shareholder returns.

Fig. 1: Overview of consolidated earnings forecasts for the Russell/Nomura Large Cap Index

(%)

Items	Category	No. of cos	FY22 Actual	FY23 Actual	FY24 Actual	New FY25E E	FY26E E		Old FY25E FY26E E E
	Russell/Nomura Large Cap (ex financials)	219	17.2	3.9	4.3	1.7	4.3		0.8	3.1
	Manufacturing	123	17.4	6.9	4.0	0.8	4.7		-0.1	3.3
Sales	Basic materials	29	24.2	-2.7	1.2	-3.2	3.0		-3.1	2.0
(% y-y)	Processing	62	16.4	10.6	4.2	1.7	5.3		0.4	3.7
	Nonmanufacturing (ex financials)	96	16.9	0.1	4.7	2.8	3.7		2.0	2.9
	Russell/Nomura Small Cap (ex financials)	925	11.0	4.0	5.4	3.6	5.2		3.2	4.8
	Russell/Nomura Large Cap (ex financials)	219	6.9	13.1	3.9	1.7	19.2		1.1	13.8
Operating profits	Manufacturing	123	3.9	7.6	3.9	-0.2	24.1		-1.9	17.4
	Basic materials	29	-6.4	-18.9	4.8	-5.0	26.6		-4.5	25.1
(% y-y)
	Processing	62	6.9	22.0	2.0	-6.0	27.5		-7.6	17.5
	Nonmanufacturing (ex financials)	96	13.3	23.7	4.1	5.1	10.8		6.3	7.9
	Russell/Nomura Small Cap (ex financials)	925	3.5	17.1	16.1	8.4	11.6		7.2	11.5
	Russell/Nomura Large Cap	243	4.2	15.0	9.0	5.6	10.2		3.4	6.4
	Russell/Nomura Large Cap (ex financials)	219	7.7	10.9	4.3	3.9	9.6		1.8	5.0
	Manufacturing	123	2.7	12.3	0.1	-1.3	23.0		-5.9	17.7
Recurring profits	Basic materials	29	-7.2	-14.6	-3.4	-0.5	24.4		-0.7	25.4
	Processing	62	4.4	26.8	-0.7	-8.1	25.4		-13.7	17.7
(% y-y)
	Nonmanufacturing	120	5.8	18.0	18.4	11.7	0.0		11.5	-2.1
	Nonmanufacturing (ex financials)	96	15.8	8.9	10.5	10.8	-6.6		12.1	-9.3
	Russell/Nomura Small Cap	1,007	0.7	18.5	11.6	9.9	11.0		7.0	11.2
	Russell/Nomura Small Cap (ex financials)	925	0.4	18.4	11.4	8.4	10.7		5.7	11.0
	Russell/Nomura Large Cap	243	3.1	14.8	7.5	3.8	12.5		3.0	6.4
	Russell/Nomura Large Cap (ex financials)	219	6.5	10.8	2.8	1.4	12.5		1.2	5.1
	Manufacturing	123	-3.1	15.8	-4.6	-2.3	27.2		-3.9	17.3
After-tax profits	Basic materials	29	-18.8	-17.7	-1.5	-5.0	30.8		-2.2	31.1
	Processing	62	-1.4	29.3	-5.9	-8.3	29.9		-10.6	16.2
(% y-y)
	Nonmanufacturing	120	10.5	13.7	20.5	8.9	1.1		8.9	-1.8
	Nonmanufacturing (ex financials)	96	23.0	4.1	14.2	6.1	-5.5		7.8	-8.9
	Russell/Nomura Small Cap	1,007	1.5	23.7	16.9	10.2	12.0		9.5	7.8
	Russell/Nomura Small Cap (ex financials)	925	0.3	25.5	17.7	8.3	12.1		8.1	7.5

Note: Latest estimates as of 3 March 2026, previous estimates as of 1 December 2025. Source: Nomura

Fig. 2: Key earnings estimate assumptions

[As of 20 January 2026] [As of 16 October 2025]

	Industrial production 2020 base year % y-y	Policy rate (FY-end) %	WTI $/bbl	Exchange rate (avg) USD/JPY EUR/JPY
FY24E	-1.4	0.50	74.3	152.40 163.57
FY25E	0.8	0.75	62.0	150.28 173.92
FY26E	1.8	1.00	60.0	155.00 180.00
FY24E H1	-2.6	0.25	77.8	152.39 165.70
FY24E H2	-0.1	0.50	70.8	152.42 161.45
FY25E H1	0.7	0.50	64.3	146.00 168.16
FY25E H2	0.8	0.75	59.6	154.57 179.68
FY26E H1	1.7	0.75	60.0	155.00 180.00
FY26E H2	1.9	1.00	60.0	155.00 180.00

Industrial production 2020 base year % y-y	Policy rate (FY-end) %	WTI $/bbl	Exchange rate (avg) USD/JPY EUR/JPY
-1.4	0.50	74.3	152.40 163.57
-0.3	0.75	62.2	148.00 171.58
1.5	1.00	60.0	150.00 175.00
-2.6	0.25	77.8	152.39 165.70
-0.1	0.50	70.8	152.42 161.45
-0.2	0.50	64.3	146.00 168.16
-0.4	0.75	60.0	150.00 175.00
1.2	0.75	60.0	150.00 175.00
1.8	1.00	60.0	150.00 175.00

Note: WTI is the term-average WTI crude oil futures price. The above assumptions are not Nomura forecasts but the assumptions on which Nomura analysts base their earnings forecasts.

Source: Nomura

Contributions to recurring profit growth by sector

Overview of corporate earnings outlook for FY25

Our analysts expect the global economy to continue to expand in FY25 despite lingering uncertainty about the impact of US tariffs. They expect recurring profits to increase in 12 of 19 sectors and fall in seven. However, they expect only modest recurring profit growth on an all-sector basis because of the size of the prospective decline in profits at the automobiles sector.

Sectors expected to make major positive contributions to overall profits include telecommunications, financials, electrical machinery & precision equipment, pharmaceuticals & healthcare, and food. In telecommunications, our analysts envision substantial profit growth at SoftBank Group's investment fund business. In financials, they expect further earnings growth at banks, especially major banks, on the back of rising interest rates in Japan. In electrical machinery & precision equipment, they expect profits to rise on continued solid demand for IT services and the disappearance of one-time losses, including impairments, posted by some companies in FY24. In pharmaceuticals & healthcare, they forecast increased sales of pharmaceuticals and medical devices, along with the disappearance of impairment losses booked in FY24. In food (including beverages & tobacco), they expect Japan Tobacco to benefit from the disappearance of provisions for litigation losses at an overseas subsidiary booked in FY24.

Sectors expected to make major negative contributions to profits include automobiles and transportation. In automobiles, our analysts expect companies to book one-time costs such as impairment losses on EVs as well as being hit by additional US tariffs. In transportation, they expect major shipping companies to be hit hard by containership rates, which rose in FY24 but have fallen again in FY25. They also expect a fallback from the sale of a major multipurpose building by Seibu Holdings in FY24.

Overview of corporate earnings outlook for FY26

Our analysts expect the global economy to continue to expand in FY26, and the impact of US tariffs to fade too on a y-y basis. They expect recurring profits to increase in 18 of 19 sectors. The only sector where our analysts expect recurring profits to fall is telecommunications, where they expect investment fund profits at SoftBank Group to be lower than in FY25.

Sectors expected to make major positive contributions to overall profits include electrical machinery & precision equipment, financials, automobiles, chemicals, machinery, and steel & nonferrous metals. In electrical machinery & precision equipment, our analysts expect profits to be supported by a wide range of factors, including increased demand for semiconductors and electronic parts, particularly for automotive and data center applications, fixed-cost savings, including personnel costs, and continued solid demand for IT services. In financials, they forecast further earnings growth at banks, particularly major banks, as in FY25. In automobiles, they expect boosts from higher auto sales volumes and cost savings. In chemicals, they expect profits to increase across a wide range of subsectors, including a recovery in demand for semiconductor materials, improvements for basic and specialty chemicals, and improved margins on petroleum products. In machinery, they forecast growth in defense and energy-related businesses. They also assume a boost from price revisions and a weaker yen than in FY25. In steel & nonferrous metals, they expect profit contributions from acquired companies and the disappearance of one-time acquisition-related costs. They also envision strong demand for high-density optical cable and optical connectors for data centers.