The yen's weakening is having varying impacts on Japanese companies' earnings depending on their size, according to estimates by Mizuho Research & Technologies.
While a weaker yen is seen pushing up fiscal 2024 ordinary profits by 1.9% at large companies with capital of ¥1 billion or more, it is expected to have a negative impact of 1.3% for small companies with capital of 10 million to ¥100 million, the estimates showed.
The disparity arises apparently from the inability of small companies to offset rising import costs with their limited-scale exports and direct investments abroad that may benefit from the weaker yen. The research firm said it believes that the yen's weakening can be a factor behind a widening of profit gaps between large and small enterprises, noting that many workers at small companies may see their incomes grow at a sluggish pace and face difficulty increasing their consumption as a result.