Download → Outlook for FY23-24 corporate earnings

Summary and major assumption

Sales up 17.2%, operating profits up 6.9%, recurring profits up 7.7% in FY22

We have aggregated FY22 results and FY23–24 earnings forecasts by Nomura analysts for constituents of the Russell/Nomura Large Cap Index. On an all-industry (ex financials) basis, index constituents generated sales growth of 17.2% y-y, operating profit growth of 6.9%, and recurring profit growth of 7.7% in FY22. Sales registered double-digit growth on yen depreciation and price hikes. However, operating and recurring profit growth was only single-digit, well below sales growth, owing to rising input costs and one-time losses. Versus the previous such exercise, conducted on 1 March 2023, our analysts have raised their sales growth forecast by 0.5ppt and their operating profit forecast by 0.4ppt, but lowered their recurring profit growth forecast by 0.5ppt. These are not major changes.

Our analysts forecast sales growth of 0.3%, operating profit growth of 11.1%, recurring profit growth of 4.2% in FY23

On an all-industry (ex financials) basis, our analysts forecast 0.3% y-y growth in sales, 11.1% growth in operating profits, and 4.2% growth in recurring profits in FY23. Versus the previous such exercise, conducted on 1 March 2023, they have raised their sales growth forecast by 0.5ppt and their operating profit forecast by 0.3ppt, but lowered their recurring profit growth forecast by 0.1ppt.

Our analysts forecast sales growth of 2.5%, operating profit growth of 9.1%, recurring profit growth of 8.4% in FY24

We have also aggregated earnings forecasts by Nomura analysts for FY24 for the first time. On an all-industry (ex financials) basis, our analysts forecast 2.5% y-y growth in sales, 9.1% growth in operating profits, and 8.4% growth in recurring profits. They expect profits to remain on a solid upward trajectory in FY24 too, with a wide range of industries (especially manufacturers) benefiting from economic recovery in Europe and North America.

Roughly equal mix of upward revisions and downward revisions at level of individual companies

The Revision Index (RI) for the Russell/Nomura Large Cap Index (ex financials), showing the difference between the percentage of companies for which Nomura analyst forecasts were raised and the percentage of companies for which forecasts were lowered, came in at -1.1% for June 2023 (FY23 forecasts, covering 2 March 2023 through 1 June), pointing to a roughly equal mix between upward and downward revisions. While there were marked downward revisions for basic materials industries, there were multiple upward revisions for processing industries, which include automobiles, on the expectation that output would recover following the resolution of semiconductor shortages.

Total shareholder returns exceed ¥20trn for first time in FY22

Total shareholder returns came in at around ¥21.8trn in FY22, thereby exceeding ¥20trn for the first time. The total payout ratio also rose 7.3ppt y-y to 54.9%, reflecting: (1) growth in the profit pool for shareholder returns; (2) widespread share buybacks over the course of FY22 by companies that regarded themselves as undervalued in share price terms; and (3) the TSE's announcement on measures on 30 January 2023 that are intended to incentivize companies to improve their longer-term corporate value.