Two-thirds of Japanese companies expect the yen's strength to squeeze profits and 40 percent will shift production overseas if the currency remains near a 15-year high on the dollar, a government survey showed on Friday.

The survey by the Ministry of Economy, Trade and Industry asked 102 companies, mainly exporters, how the yen was impacting their business following the currency's climb to around 85 yen against the dollar, up 7 percent in the past three months.

Some 51 percent said the stronger currency was having some effect on profits, while 14 percent said the impact was severe. That is four times more than in May when the yen was above 90 per dollar and only 14 percent noted any knock on earnings.

Should the current 85 yen per dollar rate continue for six months, the proportion of companies with worsening profitability will increase to 72 percent, the survey showed.

As the strain on profits increases, business leaders may ratchet up the pressure on the government for steps to stem the yen's rise. Failing that, corporations may move more production outside Japan to protect against currency swings.

Suzuki Motor Corp <7269.T> Chief Executive Osamu Suzuki on Thursday urged Japan's government to safeguard the nation's economy and said the automaker was near the limit of what it could do to counter the yen's climb.

Many corporate managers are considering moves overseas, according to the survey. Forty percent of the corporations said they would shift factories and development facilities outside Japan, while 60 percent said they would increase the proportion of their manufacturing carried out abroad.

For some, the escape from Japan is well underway. By 2008, before the current yen strength, the average ratio of overseas production was 17 percent compared with 6 percent in 1990, according to separate data from METI.

Nissan Motor Co <7201.T> said Friday that output outside Japan rose by a fifth in July compared with a year ago and only a 4.7 percent gain at its domestic factories.

The Japanese carmaker in March shifted production of its popular March model to Thailand, a portion of which it is shipping back to sell in its home market.

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