The likes of Canon, Sony and Honda collect more revenue overseas than in Japan and the profit-eroding surge of the Japanese currency has threatened to undermine a demand revival following the global financial crisis.
The earnings season for the quarter ended December has seen Japan Inc. rake in profits thanks to a pick-up in the global economy and strengthening emerging market demand, reflected in Tokyo's Nikkei index's 1.77 percent gain last week.
But many companies have remained cautious in their outlook, maintaining earlier forecasts as the yen continues to cast a shadow, say analysts.
"Corporate earnings seem to be positive, but the impact of a higher yen is certainly there," said Taro Saito, a senior economist at NLI Research Institute.
"Figures may look good when you see the earnings compared to the previous year, when the aftermath of the Lehman Brothers collapse was still dragging on the economy," he said. "But profits have slowed because of the strong yen."
The strength of the yen has compounded the harsh environment in which Japan Inc. finds itself, given sluggish consumption and entrenched deflation at home and worries over the durability of recovery in key US and European markets.
Nintendo generates more than 80 percent of its sales overseas and holds most of its cash assets in foreign currencies. It partly blamed an 84.4 billion yen ($1 billion) foreign exchange loss for a 74 percent net profit slide in April-December.
"The speed of the yen's ascent has exceeded our capacity to cope," admitted Nintendo president Satoru Iwata last month.
In November the yen struck a 15-year high against the dollar at 80.21. While it has since stabilised at around the 82-yen level, analysts warn that its strength will continue to bite.
A strong yen causes headaches for Japanese exporters because it makes their products more expensive abroad and eats into overseas revenues repatriated to Japan.
Electronics giant Sony, which makes 80 percent of its sales outside Japan, blamed the yen's 8.7 percent rise against the dollar and its 18.5 percent gain against the euro compared to a year earlier for a third quarter revenue and net profit fall.
The maker of Bravia televisions has undergone major restructuring following the financial crisis -- slashing thousands of jobs and selling facilities -- and now faces exposure to a strong yen.
It saw an 8.6 percent decline in third quarter net profit because of the yen and also on falling LCD TV prices as it struggles against tough competition from overseas rivals with relatively cheaper domestic currencies.
For every one-yen rise in the currency's value against the dollar, Japan's exporters can lose tens of billions of yen earned overseas when repatriated.
This has forced Japanese manufacturers to rethink their production methods, switching manufacturing closer to the point of sale, or to seek lower costs by automating more assembly.
With a near 80 percent leap in operating profit to $4.7 billion in 2010, Canon, the maker of PowerShot cameras, demonstrated that efforts to cut costs -- such as by accelerating the automation of its factories -- are paying off.
"We have managed to reduce costs and improve our productivity," said Toshizo Tanaka, Canon deputy general manager, after the firm gave its annual results for 2010.
Other firms have moved production out of the country. Toyota has started making its Prius hybrid model in Thailand in its latest move to expand production overseas as the strong yen continues to bite into profits.
Nissan Motor has said it will "significantly" reduce the number of models it exports from Japan over the next three years while boosting production in overseas markets.
But in many cases the impact of a strong domestic unit has at least been eased by booming demand from China and emerging Asia for Japanese automobiles and components as well as improvements in US demand.
Honda Motor said last Monday its net profit for the three months ended December fell nearly 40 percent year-on-year, blaming the strong yen and sliding demand in Japan, but nevertheless lifted its full year profit forecast on a brighter outlook for US sales.
But the yen's strength is also hitting smaller companies, with a recent survey by a Tokyo-based financial institution showing nearly 40 percent of small firms have no particular strategies to deal with the unit's ascent.
"In addition to these movements on the foreign exchange market, companies will also have to fight against the expected rise in commodity prices due to the economic dynamism of emerging markets and meet the wage demands of local workers," said analysts at Nikko Cordial.