As earnings season kicks off in Japan, forecast upgrades by two major manufacturers could be an early indication of a profit recovery among the nation’s blue chips.

Canon Inc. and Nidec Corp., two of the earliest major manufacturers to report earnings, both upgraded their full-year outlooks on Monday. Canon is now forecasting operating profit 42% higher than the figure it gave previously, while Nidec lifted its outlook by 12%.

Both companies cited the impact of improved sales and cost cuts, and the newly released predictions were each broadly in line with the average analyst estimates. The upgrades follow that of Murata Manufacturing Co., which gave preliminary first-half earnings well above its forecasts on Friday, while also suggesting it may lift its full-year outlook when it gives full earnings on Oct. 30.

With the companies among the earliest to report of Japan’s major manufacturers, investors will be watching to see how quickly earnings recover from the shock of the coronavirus pandemic. Results by many major retailers, which reported earlier in the season, were also largely positive, with Seven & I Holdings Co. lifting its full-year outlook and Uniqlo owner Fast Retailing Co. expecting profit above estimates.

Nidec cited the results of its cost-cutting program that lifted second-quarter operating profit. At Canon, third-quarter operating profit blew past even the most bullish analyst estimates. The two firms operate on different financial years.

Investors shrugged off news that Canon’s dividend would be half that paid last year, with the company prioritizing cash management. Earlier this month, shares in Yaskawa Electric Corp., a traditional tech bellwether, had tumbled despite a profit outlook broadly in line with estimates, after it signaled a similar cut to its payout.

Canon rose as much as 5.1% in early trading on Tokyo on Tuesday, the most since July. Nidec fell as much as 4% before paring most of those losses.

Many analysts are so far sticking to the guidance given by often conservative blue chips. For almost 40 of the country’s biggest firms by market value that have given an operating profit forecast for the full year, only around half have an average estimate that differs 5% or more from company guidance, according to data compiled by Bloomberg.

Among the biggest discrepancies are seen at Toyota Motor Corp., with analysts still projecting the automaker to post more than twice the ¥500 billion it is forecasting, as well as at Fanuc Corp. and Nintendo Co.

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