Japanese automakers are facing risks from the impact of the Iran-Iran war and the strengthening yen, after Toyota, Honda, and Nissan previously benefited from a weaker currency in the last quarter.
On August 17, 2569 at 12.18:2 PM, CNBC reported that Toyota, Honda, and Nissan benefited from historically low currency values in their latest quarterly earnings reports. The first two companies raised their full-year earnings forecasts, while Nissan recorded its first profit in approximately two years. However, external factors may not continue to influence these figures.
The U.S. Treasury and Japan's Finance Ministry jointly intervened in a rare move to buy yen in early August, a historic action that followed the yen's plunge to a 40-year low of 163 per dollar. This occurred as Japanese automakers typically rely on a weaker yen to make their export vehicles cheaper and more competitive in the global market. The move therefore served as a warning sign.
"If government intervention is aimed at strengthening the yen, this would negatively impact Japanese automakers." Vincent Sun, Senior Equity Analyst at Morningstar. say
The Sun newspaper stated that a stronger yen would force automakers to decide between raising prices in overseas markets, which could lead to a loss of market share, or allowing operating profits to be pressured by the reduced value of overseas profits when converted back to yen.
"Generally, a 1% change in the yen's value affects the operating profit of Japanese automakers by approximately 2%." Masahiro Akita, senior analyst at Bernstein. say "Although sensitivity varies from company to company and can be as high as around 4% for some automakers."
Analysts also believe that the ongoing conflict in the Middle East could pose problems, with The Sun pointing to increased supply chain disruptions and higher costs. The Strait of Hormuz and the Red Sea are crucial shipping routes for Japanese automakers, who rely on aluminum and petrochemicals such as naphtha for vehicle production.
"The most significant negative pressure on automakers' earnings is the soaring cost of raw materials, which has intensified amid the ongoing conflict in the Middle East." Akita said.
“Inflation on key imports, including naphtha and oil-linked resins, memory chips, and industrial metals such as aluminum, copper, and iron, is having a widespread and negative impact on the profitability of industries.” Akita added.
refer : cnbc.com
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