Nomura expects sales decline of 4.5%
These forecasts represent downward revisions versus our previous forecasts issued in September 2016 (based on data collated on August 23, 2016) of 0.8ppt for sales and 0.9ppt for recurring profits.
Nomura's forex assumptions for FY16 are USD/JPY of 104.1 (previously 105.7) and EUR/JPY of 116.0 (previously 117.5). WTI assumption is $47.6/bbl ($45.1/bbl).
Nomura expects sales and profits to decline based on company's assumption that the yen will be just under ¥16 stronger versus the US dollar in FY16 than in FY15. If this proves true, the uptrend in recurring profit grow th would come to an end after four fiscal years.
The revision index for recurring profit forecasts stands at 11.1, the fifth consecutive quarter of negative readings for the revision index.
That said, combined downward revisions to our FY16 recurring profit forecast came to just ¥320bn, around half of the previous combined dow nw ard revision to our forecast.
The revision index improved for a second straight quarter, backing up company's view that the worst is over for earnings. ■