Japan's largest companies are likely to paint a bleak picture for this year's profits when they start announcing earnings this week, if they offer any guidance at all.
More than a month after Japan's devastating earthquake and tsunami on March 11, firms are still struggling with unraveled supply chains and sluggish consumer demand, making predicting future profits difficult if not impossible.
Investors in Japan, used to companies providing guidance for a full year ahead, will be forced to rely increasingly on the number crunching of equity analysts, who themselves are struggling to form a clear picture of future demand.
Earnings season is here and we want to focus on outlooks for the current year, but it may be only a minority of companies that can provide one, Daiwa Securities Group chief executive Takashi Hibino told Reuters in a recent interview, predicting the uncertainty would last through the summer.
Among blue-chip firms announcing earnings this week for the business year ended in March are video game giant Nintendo on Monday and Honda Motor on Thursday.
Office equipment and camera maker Canon Inc, which has a business year running from January to December, reports its earnings on Tuesday.
Barclays Capital projects that the average net profit at all firms listed on the Tokyo Stock Exchange's first section, which includes Japan's biggest firms, will fall 12 percent this financial year, with the slide led by export-related industries such as auto and electronics firms.
Data from Thomson Reuters Starmine shows that analysts have on average revised down their profit estimates across all sectors by 6 percent in the past 30 days.
The biggest drop was for utilities at 37 percent due mainly to sharp downward revisions for crisis-hit Tokyo Electric Power. That was followed by automobiles and components at minus 24.6 percent and the semiconductor sector down 11 percent.
Much of that gloom may already be factored in to share prices. Tokyo's transportation equipment and electrical machinery subindexes are both down about 6 percent since March 11, although that outperforms the TOPIX's 8 percent decline.
The auto and electronics sectors are expected to either announce conservative outlooks for this fiscal year or postpone the release of outlooks, said Yoshinori Nagano, a senior strategist at Daiwa Asset Management. But negative sentiment on these sectors is somewhat priced in.
Some firms have already declined to estimate profits this year. Yaskawa Electric Corp, the world's largest maker of industrial robots used by automakers and chip producers did not give a forecast when it released results on April 20, citing worries about whether it can get enough parts.
Nowhere has the disruption to supply chains been more severe than in the auto sector.
Toyota, Nissan Motor Co and Honda all suspended production for a good part of the first month following the earthquake, and have slashed production by half of their intended output since then.
The impact has even spread to factories in North America, Europe and Asia as they too run out of parts.
For Toyota, which said on Friday that it could take until December for output to return to pre-quake levels, projections from 11 analysts who revised their forecasts after the earthquake yielded an average operating profit of 281.9 billion yen for the year to March 2012.
That is down 65 percent from the consensus of 804 billion yen from 21 analysts before the quake, according to Thomson Reuters I/B/E/S. When the world's No. 1 carmaker announces its results on May 11, the company may opt not to provide its own forecast.
Assessing the outlook for Japan's electronic conglomerates may also tax the divining skills of analysts this earnings season. The consensus for Sony Corp's profit has fallen only 14.5 percent to 270.1 billion yen in the past 30 days, despite plant stoppages.
One source of concern is that analysts have not cut their estimates for the current year by very much, said Koji Toda, chief fund manager at Resona Bank in Tokyo. I think many are leaving their figures unchanged because they don't have enough information to decide how far to cut them.
Overseas investors who do not follow Japanese equities closely may get a shock when forecasts finally emerge, possibly about the time of first quarter earnings in June, Toda said.
The effect of that, he added, could weigh on share prices for some time.
Japan's Nikkei stock index is down about 5 percent since March 11 and is one of the worst performing developed, major equity markets so far this year.
Not all the uncertainty may result in negative surprises. Some investors are encouraged by the speed at which power generation capacity has recovered since the quake, and initial plans to force large users to cut back by a quarter may be eased.
Some investors and business executives see supply woes fading in the second half of the financial year, while consumption is likely to rise as spending kicks in to revive the stricken northeast.
(Additional reporting by Chang-ran Kim and Ayai Tomisawa; Editing by Tim Kelly and Nathan Layne)