Japan's accelerating defence spending will likely lift Kawasaki Heavy Industries' related sales above its projection in the coming years, its CEO said on Wednesday, as contractors benefit from an unprecedented military build-up.
Japan's Prime Minister Sanae Takaichi plans to raise defence spending to two per cent of GDP by the end of March 2026 from about one per cent in March 2023, two years earlier than planned, to deter China from pursuing its territorial ambitions in East Asia.
Her government will begin work on a new defence plan next year.
Since Takaichi took office in October, "plans have become clearer and more concrete, and the level of predictability has increased," Kawasaki President Yasuhiko Hashimoto said during a press briefing.
The company, which builds submarines, missile engines, military transport aircraft and helicopters, has predicted a jump in annual defence unit sales to 500 billion-700 billion yen ($3.2 billion-$4.5 billion) by March 2031 from about 240 billion yen in 2023.
"Based on current conditions, we think 700 billion yen is largely achievable, and there is also a possibility of upside beyond that," Hashimoto said.
(Reporting by Tim Kelly and Nobuhiro Kubo; Editing by Sumana Nandy)