Densan System Holdings Co (4072) Q3 2024 earnings summary

Executive summary

• Net sales for 3Q FY2024 rose 2.1% year-over-year to ¥45.1 billion, driven by strong cloud projects, especially with Google.

• Operating income dropped 52.2% year-over-year to ¥1.46 billion due to increased costs and unprofitable projects.

• Net income fell 59.2% year-over-year to ¥847 million, impacted by goodwill impairment and investment security valuation losses.

Financial highlights

• Operating income ratio decreased to 3.2% from 6.9% year-over-year.

• Ordinary income for 3Q FY2024 was ¥1.62 billion, down 48.0% year-over-year.

• Gross profit decreased from ¥8,185 million to ¥6,713 million year-over-year.

• Earnings per share fell from ¥193.97 to ¥79.66 year-over-year.

• Progress toward revised full-year plan: net sales at 73.7%, operating income at 63.5%, net income at 60.1%.

Outlook and guidance

• Full-year net sales forecast revised down to ¥61.2 billion, a 6.8% decrease from the initial plan, but up 2.7% year-over-year.

• Full-year operating income forecast cut by 43.9% to ¥2.3 billion; net income forecast reduced by 49.5% to ¥1.41 billion.

• Full-year earnings per share projected at ¥130.62.

• Lowered guidance reflects project delays, cost increases, and customer attrition in payment services.

• Dividend forecast raised to ¥60.00 per share for FY2024.