Kawasaki Heavy Industries reported a 25% decline in second-quarter business profit as yen appreciation and elevated tariff expenses offset record revenue growth, testing the conglomerate’s ability to navigate shifting currency markets and trade pressures.
Business profit fell to ¥35.7 billion ($232 million) in the three months ended September from ¥47.7 billion a year earlier, the Tokyo-based company said Monday. Revenue climbed 13% to a record ¥996.2 billion, driven by stronger performance across its Energy Solution & Marine Engineering and Powersports divisions.
The weaker profit margin reflects mounting headwinds from currency volatility and US tariff policies that added approximately ¥2.8 billion in costs to the Powersports business. The average dollar-yen rate of 145.12 during the quarter compared with 151.44 a year earlier, crimping profitability on dollar-denominated sales.
Despite the quarterly setback, Kawasaki maintained its forecast for record annual business profit of ¥145 billion on revenue of ¥2.34 trillion for the fiscal year ending March 2026. The company expects profit to be weighted toward the second half, particularly in Aerospace Systems where defense contracts and commercial aircraft engine maintenance are concentrated in later quarters.
The Aerospace division saw operating profit plunge 60% to ¥10.1 billion as investments in engine maintenance capacity and higher production volumes for new commercial aircraft engines pressured margins. Energy Solution & Marine Engineering provided a bright spot, with profit jumping 65% to ¥19.9 billion on improved performance in power generation equipment and shipbuilding.
Kawasaki left its annual dividend unchanged at ¥150 per share, representing a payout ratio of 31%.
