Hitachi shares slide as Q2 profit drop overshadows strong top-line earnings

Hitachi Ltd shares plummeted 10.5% on Thursday, becoming the weakest performer on Japan's Nikkei index, as a decline in second-quarter profits contrasted with a record revenue. The stock closed at ¥5,030, while the Nikkei 225 index increased by 1.2%.

Hitachi's revenue surged 15% year-over-year to a record ¥2.904 trillion, prompting the company to raise its full-year profit forecast for fiscal 2026. The company upgraded its net profit outlook from ¥900 billion to ¥920 billion, disclosed on Wednesday evening. However, net income attributable to shareholders declined to ¥227.1 billion from ¥280.6 billion due to a one-time cost surge in the Digital Systems & Services segment.

The rise in revenue did not suffice to counteract the drop in bottom-line profit, as the stock approached a five-year high in valuation multiples. Despite raising its interim dividend to ¥32 per share, the company's share buyback program remained on track, with 52% of the ¥550 billion full-year program completed.