Gun Ei Chemical Industry (4229) Q2 2024 earnings summary

Executive summary

• FY24 H1 revenue fell 1.2% YoY to ¥15.618bn as weak electronic-materials demand outweighed growth in environmental materials and non-residential insulation products.

• Operating profit rose 79.5% to ¥1.606bn, supported by price pass-through, higher sales of high-performance environmental fibers and improved overseas subsidiary earnings.

Financial highlights

• Ordinary profit increased 74.3% YoY to ¥1.837bn; net income attributable to owners rose 70.9% to ¥1.269bn.

• Revenue declined ¥192m YoY; operating profit increased ¥711m, with lower sales a drag and reduced costs and SG&A supporting the gain.

• Operating cash flow was ¥2.139bn versus ¥323m a year earlier; period-end cash and cash equivalents increased to ¥9.114bn from ¥7.369bn.

Outlook and guidance

• FY24 forecast revised to revenue ¥31.0bn, operating profit ¥2.4bn, ordinary profit ¥2.6bn and net income ¥1.8bn; operating margin forecast is 7.7%.

• Versus initial guidance, revenue was cut ¥1.0bn while operating and ordinary profit rose ¥500m each and net income rose ¥400m; forecast FX is ¥140/$ and naphtha ¥65,000/kL.

• H2 outlook factors in delayed semiconductor-market recovery and a weaker China economy; H1 earnings benefited from solid display and non-residential insulation demand, price pass-through and overseas improvement.