As Japan's earnings season swings into full gear, the strong performance by major companies is expected to continue into the next year despite a struggling economy and conservative outlooks from corporations.
Analysts say Japan Inc will continue to post solid profit growth this and the next year, buoyed by cheaper oil prices, recovery in domestic demand and the sharply weakened yen.
This even as the world's third biggest economy continues to suffer deflationary pressures after the consumption tax hike last year, which caused the economy to dip into technical recession in the third quarter.
Goldman is forecasting recurring profit growth of 11 percent on-year in the fiscal year 2014 that ended in March, and of 22.1 percent on-year in fiscal 2015 for the 1,675 companies listed on the first section of the Tokyo Stock Exchange.
Daiwa Securities, meanwhile, is predicting profit growth of 6 percent on-year in fiscal 2014 and of 14 percent on-year in fiscal 2015 for the 200 firms in its large cap index.
And "there is plenty of room to revise upwards," Daiwa chief analyst Tokushi Yamazaki told CNBC by phone. "Cheaper oil and the impending recovery in domestic consumption could lift corporate profits to up to 20 percent in fiscal 2015," he said.
The rapidly-depreciating yen, which has weakened 50 percent against the dollar since Prime Minister Shinzo Abe came into power at the end of 2012 and launched radical measures to reflate the economy, will also drive earnings, especially at Japan's blue chip manufacturers.
"Companies with large overseas sales, such as the car sector, will continue to do well," Daiwa's Yamazaki said.
However, the source of profit growth could be shifting to the financial sector in fiscal 2015, according to Goldman.
Brokerages have revised their earnings by the widest margin, by over 40 percent, for fiscal 2015, according to Goldman's earnings revision index. "The brokerage sector, other financing businesses, insurance, real estate and banks have strong earnings momentum and have raised earnings forecasts," said the bank.
Don't be fooled
The upbeat forecasts by analysts seem to fly in the face of ultra-conservative forecasts from companies themselves.
Firms surveyed in the March Bank of Japan Tankan survey said they only see profits rising by a bearish 1.3 percent in fiscal 2015.
"On average, [guidance] is around five to seven percent below [analysts'] consensus," according to Goldman.
The bank partly attributes the conservatism to currency projections. The Tankan survey showed large manufacturers predicting dollar-yen to fall to 112 yen towards the end of 2015, even though the yen has been trading at around, or just below, 120 to the U.S. dollar since early 2015.
"When the yen is depreciating, Japanese companies have a strong tendency to use a rate that is higher than the spot rate to give them a buffer," said Goldman.