Furukawa Electric (5801) Q4 2024 earnings summary

Executive summary

• FY23 net sales were ¥1,056,528 million and operating income ¥11,171 million, down YoY but above February forecasts by ¥16.5bn and ¥6.2bn, respectively.

• FY24 forecasts call for higher sales and profit at each stage, with recovery in semiconductor and optical cable markets and stable automotive production underpinning the outlook.

• FY25 targets remain unchanged: operating income above ¥58.0bn, ROIC above 6%, and net income attributable to owners of the parent above ¥37.0bn.

• Comprehensive income rose 28.3% YoY to ¥34,989 million despite lower earnings.

Financial highlights

• FY23 ordinary income was ¥10,267 million and net income attributable to owners of the parent was ¥6,508 million; net income fell ¥9.4bn, partly reflecting prior-year extraordinary income from a ¥10.8bn gain on sale of equity interests in consolidated subsidiaries.

• FY23 net sales included a ¥12.6bn negative impact from changes in consolidation scope and a ¥27.0bn negative real change, partly offset by ¥31.0bn from foreign exchange.

• FY23 operating income benefited ¥6.9bn from price optimization and cost reductions, while lower operating volumes reduced income by ¥5.7bn; TOTOKU deconsolidation reduced sales by ¥12.2bn and operating income by ¥2.3bn.

• Operating cash flow was ¥31,896 million, investing cash flow -¥24,794 million, financing cash flow -¥9,322 million, and year-end cash ¥53,098 million.

Outlook and guidance

• FY24 forecasts: net sales ¥1,080.0bn, operating income ¥25.0bn, ordinary income ¥20.5bn, net income ¥13.0bn, and operating margin 2.3% versus 1.1% in FY23.

• FY24 operating income growth of ¥13.8bn includes ¥17.2bn from improvement effects, offset by higher raw material and fuel costs, depreciation, R&D, and other expenses.

• FY24 assumptions include average copper at ¥1,155/kg and ¥140/US$; semiconductor and optical cable markets are expected to recover gradually from FY23 lows.

• FY25 targets include net sales above ¥1,100.0bn, operating income above ¥58.0bn, ROE above 11%, capital ratio above 35%, and net D/E below 0.8.