Mitsubishi Heavy forecasts 10% profit growth this year on strong defence demand

By Kantaro Komiya

TOKYO, May 9 (Reuters) - Japan's Mitsubishi Heavy Industries 7011.T on Friday projected a 9.6% growth in operating profit for the year on robust defence demand, while excluding the potential impact of U.S. tariffs, though the outlook and fiscal 2024-25 earnings missed estimates.

The company expects an operating profit of 420 billion yen ($2.9 billion) for the financial year to March 2026, following a 35.6% jump to 383.2 billion yen in the previous year.

In the current fiscal year, operating profit from the aerospace and defence segment is expected to grow 40%, while earnings from energy systems — including power generation equipment like turbines — are projected to rise 17%, the company said.

The forecast "does not include upside or downside risk from U.S. tariff policy impact", Mitsubishi Heavy said in a presentation.

While some cost increases are expected for imported parts for U.S.-made gas turbines, "we plan to minimize direct impact through price pass-through," Chief Financial Officer Hisato Kozawa told a briefing.

"What worries us the most is rather the secondary impacts of economic downturn, or reduction in logistics volume," Chief Executive Eisaku Ito said, adding that Mitsubishi Heavy would consider diversifying production sites.

Meanwhile, Ito said the demand for the company's power generation systems will remain resilient, driven by investments in data centres and the reshoring of manufacturing back to the U.S., a policy championed by U.S. President Donald Trump.

For the full 2024-25 year, revenue came in at 5.03 trillion yen, slightly above analysts' mean estimate in data compiled by LSEG, but net income was at 245.4 billion yen, below the consensus estimate of 267.0 billion yen.

Mitsubishi Heavy's shares fell more than 7% following the earnings release but recovered in afternoon trading, closing down 5.6% on Friday.

Amid Japan's largest post-war defence buildup, Mitsubishi Heavy, a major manufacturer of jets, missiles and naval ships for Japanese forces, has seen its shares surge more than fivefold over the past two years.

($1 = 145.5000 yen)