Hioki EE (6866) Q2 2024 earnings summary

Executive summary

• H1 2024 revenue fell 8.2% YoY to ¥18,662m; operating profit declined 26.4% to ¥3,344m and ordinary profit fell 23.6% to ¥3,614m.

• Interim net income was ¥2,620m, down 24.0%; EPS was ¥191.82 versus ¥252.45 a year earlier.

• Full-year guidance was cut July 9 following Q2 order trends; management expects recovery from the 2023 Q3 order trough, supported by new products and organizational changes.

Financial highlights

• H1 orders were ¥19,465m, 96.4% of the prior-year level; revenue was ¥18,662m versus ¥20,334m.

• Gross profit was ¥9,141m versus ¥9,605m; gross margin improved to 49.0% from 47.2%.

• Cost of sales was ¥9,520m (51.0% of revenue); SG&A was ¥5,797m versus ¥5,060m a year earlier.

• Operating profit fell ¥1,201m YoY: lower sales reduced gross profit by ¥1,945m, partly offset by ¥622m from improved gross margin and ¥316m from favorable FX; fixed costs rose ¥194m.

• Comprehensive income was ¥2,994m versus ¥3,749m.

Outlook and guidance

• Revised FY2024 forecasts: revenue ¥40,000m, operating profit ¥8,000m (20.0% margin), ordinary profit ¥8,320m and net income ¥6,360m.

• Revenue and operating profit guidance was reduced from ¥42,000m and ¥8,700m; forecast EPS is ¥465.58 and annual dividend is ¥200/share versus ¥180 in FY2023.

• Products launched since late 2023 are expected to contribute to recovery from Q3; organizational changes in Japan and China are expected to show results in H2.

• Ueda No. 2 factory began operations July 8; production optimization aims to support consolidated sales capacity exceeding ¥50bn.