Japanese Industrial Leaders Komatsu, Hitachi, and Mitsubishi Forecast Profit Declines Due to U.S. Tariffs

Komatsu Ltd., Hitachi Construction Machinery, and Mitsubishi Electric have revised their fiscal 2025 profit forecasts downward due to U.S. tariffs. Komatsu expects a ¥94 billion profit decline, while Hitachi and Mitsubishi anticipate ¥30 billion each. These companies face increased import costs and disrupted supply chains, impacting Japan's export-driven economy. The Bank of Japan has noted tariffs as a factor in lowering GDP growth forecasts. Japan's trade negotiator is in talks with the U.S. to remove tariffs, but negotiations are challenging, affecting broader industry sentiment and prompting some firms to shift production overseas.

Komatsu Projects ¥94 Billion Profit Hit from Tariffs

Komatsu Ltd., one of the world’s largest manufacturers of construction and mining equipment, has revealed that it expects a significant reduction in operating profit for the current fiscal year due to the impact of U.S. tariffs. The company estimates a decline of more than ¥94 billion (approximately $610 million), primarily driven by increased costs associated with importing construction machinery and parts into the U.S. through its local subsidiaries.

Despite reporting a 6.2% increase in consolidated net sales for fiscal 2024, buoyed by strong demand for mining equipment, Komatsu’s outlook for fiscal 2025 has been clouded by trade policy headwinds. Analysts have also revised their earnings per share (EPS) forecasts downward, with statutory EPS now expected to fall 12% to ¥417 in 2026, compared to earlier estimates of ¥440. While revenue projections remain steady at around ¥4.06 trillion, the company is expected to underperform its industry peers, which are forecast to grow revenues by 4.5% annually.

Komatsu’s new medium-term management plan, “Strategic Growth Plan 2025–2027,” aims to achieve industry-leading profitability and maintain a return on equity above 10%. However, the near-term impact of tariffs threatens to derail these ambitions, at least temporarily.

Hitachi Construction Machinery Faces ¥30 Billion Profit Risk

Hitachi Construction Machinery, another major player in the global construction equipment market, is also bracing for a substantial hit to its bottom line. The company has disclosed that its operating profit could be reduced by approximately ¥30 billion in fiscal 2025 due to U.S. tariffs. Unlike Komatsu, which operates manufacturing facilities in the Americas, Hitachi produces nearly all of its construction machinery and components in Japan and exports them to the U.S., making it particularly vulnerable to import levies.

Under its “BUILDING THE FUTURE 2025” initiative, Hitachi had been expanding its presence in the Americas and successfully achieved its revenue target of ¥300 billion from the region. However, the imposition of tariffs threatens to erode these gains. The company has emphasized its commitment to delivering innovative solutions and enhancing its value chain, but the immediate financial impact of trade barriers remains a pressing concern.

Mitsubishi Electric Warns of ¥30 Billion Operating Profit Decline

Mitsubishi Electric, a diversified industrial conglomerate, has also joined the growing list of Japanese firms forecasting profit declines due to U.S. trade measures. The company expects its operating profit to fall by around ¥30 billion in the current fiscal year, citing the effects of blanket tariffs and increased costs for exporting industrial and electronic components to the U.S.

While Mitsubishi Electric has not provided a detailed breakdown of the affected product lines, the company’s broad exposure to global markets and reliance on cross-border supply chains make it susceptible to trade disruptions. The firm’s warning aligns with broader concerns expressed by the Bank of Japan (BOJ), which has cited tariffs as a key factor behind its downward revision of Japan’s GDP growth forecast to 0.7% for fiscal 2026.

Broader Industry Impact and Trade Policy Context

The profit warnings from Komatsu, Hitachi Construction Machinery, and Mitsubishi Electric come amid a broader wave of concern across Japan’s export-reliant manufacturing sector. According to the BOJ’s latest “Outlook for Economic Activity and Prices,” the imposition of wide-ranging U.S. tariffs—some as high as 24% on automobiles and steel—has already begun to suppress corporate profits, weaken export demand, and dampen business investment.

Japan’s top trade negotiator, Ryosei Akazawa, is currently engaged in a second round of talks with Washington, seeking the full removal of these tariffs. However, the negotiations remain fraught, with Japan refusing to make concessions on agricultural imports—a key sticking point for the U.S. administration.

The uncertainty has already prompted some Japanese manufacturers, such as Toyota, to shift production to Southeast Asia in an effort to mitigate tariff exposure. Meanwhile, companies like Fanuc, a leading industrial robot maker, have withheld earnings guidance altogether, citing the need to “carefully assess the impact of U.S. tariffs before issuing a rational forecast.”

Market and Policy Reactions

The Japanese government has announced emergency measures to cushion the blow of trade disruptions, including subsidies for fuel and electricity costs. However, these steps are seen as stopgap solutions. The BOJ has maintained a “wait-and-see” stance on interest rates, emphasizing that any future tightening will depend on the resolution of trade tensions and the resilience of domestic consumption.

In the equity markets, investor sentiment remains cautious. While Komatsu’s stock has gained 38.6% over the past six months, driven by strong past performance and optimism around its medium-term strategy, the recent earnings downgrade has tempered expectations. Analysts have noted that Komatsu’s revenue is now forecast to decline at an annualized rate of 1.1% through 2026, a stark contrast to its 14% growth over the past five years.

References

• Komatsu Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
• Zacks Industry Outlook Highlights Caterpillar, Komatsu and Hitachi Construction Machinery
• 上場企業 米関税措置で今年度の業績 押し下げの見通し相次ぐ | NHK
• BOJ Holds Rates Amid Tariff-Driven Growth Slump: Navigating Uncertainty in Japan's Economy
• Japan's factory activity falls on US tariff worries, PMI shows