Kawasaki Heavy Industries has announced that its business profit for the fiscal year ending March 2026 is expected to reach 145 billion yen, marking a 1.3% increase from the previous year and setting a new record.
On May 9, 2025, the company revealed its financial outlook, highlighting the potential impact of high tariff policies implemented by the Trump administration on its Power Sports & Engine (PS&E) business, which includes motorcycles. This development comes as Kawasaki prepares for the possibility of a market downturn.
During an online earnings conference held the same day, President Yasuhiko Hashimoto addressed concerns regarding U.S. tariffs, stating, "We will minimize the impact by passing on prices, reducing costs, and introducing competitive products to the market." This approach reflects the company’s strategy to absorb tariff-related costs through price adjustments rather than directly passing those costs onto consumers.
Despite the challenges posed by tariffs, Kawasaki anticipates that its overall business performance will remain solid. The company projects sales revenue to reach 2 trillion 310 billion yen, an 8.5% increase compared to the previous fiscal year. This optimistic outlook is bolstered by expected growth in aerospace engine revenues, which are anticipated to offset the financial pressure from a stronger yen.
The exchange rate for this fiscal year has been set at 1 dollar to 140 yen, a 10 yen appreciation compared to the last fiscal year. While this change is expected to reduce business profit by approximately 34.1 billion yen, the anticipated revenue growth in aerospace engines is expected to mitigate some of this impact.
Net profit for the fiscal year is projected to be 82 billion yen, reflecting a 6.9% decrease. However, this figure is still a testament to the company’s resilience in a challenging economic environment.
In terms of motorcycle sales, Kawasaki is preparing for a potential decline in demand in the U.S. market due to the impact of tariffs. Nevertheless, the company remains optimistic about its sales performance, having planned to sell 505,000 units globally in the fiscal year ending March 2026, which represents a 5.2% increase from the previous year.
President Hashimoto noted that Kawasaki has three months' worth of inventory ready before tariffs are imposed on products destined for the United States. He explained, "(From June 2025 onwards) we will be affected by tariffs, but it is the lowest class of 3 billion yen." This statement indicates that while the company will face some financial strain, it has prepared adequately to manage the situation.
Furthermore, Hashimoto expressed confidence in the company’s product reception, stating, "Fortunately, motorcycles are well-received by customers and sell even if we raise prices." This sentiment underscores Kawasaki's belief that its strong brand loyalty will help mitigate the effects of rising costs due to tariffs.
In the previous fiscal year ending March 2025, Kawasaki reported sales revenue of 2 trillion 129.3 billion yen, a significant 15.1% increase from the prior year. The company’s business profit for that period soared to 143.1 billion yen, representing a remarkable 3.1-fold increase. This growth was achieved despite the negative financial impacts from recall-related expenses associated with its four-wheeled vehicle division.
As Kawasaki Heavy Industries moves forward, it appears well-positioned to navigate the complexities of a changing economic landscape, demonstrating a commitment to maintaining profitability while adapting to external pressures. The company’s proactive measures and strategic pricing policies reflect a deep understanding of market dynamics and consumer behavior, ensuring that it remains competitive in the global arena.
In summary, Kawasaki Heavy Industries is poised for a successful fiscal year, bolstered by a strong performance in various sectors and a strategic approach to managing external challenges. The company’s ability to adapt to changing market conditions, particularly in light of tariff impacts, will be crucial in sustaining its growth trajectory.