Japanese machine tool orders increased 8% in April as Chinese demand grew

Japanese machine tool orders increased by 8% in April, and demand in China increased

According to data released by the Japan Machine Tool Builders’ Association (JMA) on May 15, the amount of machine tool orders (preliminary value) in April increased by 8% year-on-year to 130.2 billion yen. Overall growth has been achieved for seven consecutive months. Considering the current situation, manufacturers generally believe that corporate factory investment will continue to remain strong.

From the composition of machine tool orders in April, domestic orders in Japan decreased by 5% to 34.4 billion yen, and overseas orders increased by 13% to 95.7 billion yen. The JMA said, “The level is acceptable. Although equipment investment by small and medium-sized enterprises in Japan is weak, there has been no impact such as the suspension of negotiations caused by US tariffs.”

Judging from the situation in factory automation-related fields such as machine tools and robots, many companies expect to achieve both revenue and profit growth in fiscal 2025 (ending March 2026). Although there is a risk of equipment investment slowing down due to Trump’s tariffs, the mainstream view is that the risk can be offset by the recovery of demand in China and semiconductor-related fields.

Makino Milling Machine Co., Ltd. believes that the appreciation of the yen will cause the company’s consolidated sales in fiscal 2025 to decrease by 11.3 billion yen from the previous fiscal year, and its operating profit to decrease by 2.1 billion yen, but from the full-year performance, both sales and operating profits will set new historical highs.

30% of Makino’s sales come from the US market, where there are few local competitors. The company believes that even if the tariffs imposed on imports from outside the United States are passed on to prices, it will not have a significant impact on orders.

Okuma expects sales and operating profits to grow in fiscal 2025 after a two-year gap. In addition to the investment brought about by customers moving production to the United States due to tariffs, the recovery of demand in the aerospace and semiconductor fields, where demand is strong, will also contribute.

Factory automation parts company SMC estimates that the negative impact of tariffs and exchange rates combined will lead to a 55 billion yen reduction in sales and a 29.6 billion yen reduction in operating profit. Despite this, due to factors such as the localization of China’s manufacturing industry and the factory investment brought about by Chinese manufacturers moving production to Southeast Asia, the company plans to achieve double growth in revenue and operating profit after three fiscal years.
The decline in demand for semiconductors and the Chinese market is believed to have bottomed out, and in the factory automation industry, expectations for a full recovery in 2025 seem to have outweighed concerns about the downside caused by tariffs.

Some companies are also wary of risks. The headquarters of Misumi Group, a factory automation parts company, expects a decline in both revenue and profit. The company believes that tariffs and the appreciation of the yen will lead to a decline in sales, which cannot be compensated by increased sales.

Robot company Fanuc did not disclose its performance expectations because the impact of US tariffs is difficult to predict. President Kenji Yamaguchi said, “If high tariffs are imposed, we may expand production in the United States as one of the options for the future.”

Even companies that expect to achieve both revenue and profit growth must be prepared to cope with sudden changes in the business environment.