Kaga Electronics Co (8154) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 FY2025/3 declined 6.6% year-over-year to ¥128.6 billion, mainly due to inventory adjustments at key customers and reduced transactions with a major customer.

• Operating income dropped 20.6% year-over-year to ¥5.55 billion, impacted by lower sales and increased SG&A expenses, including wage and logistics cost rises.

• Net income fell 28.4% year-over-year to ¥4.13 billion, reflecting the absence of a prior-year gain on sale of investment securities.

• Gross profit margin improved by 0.5 percentage points to 13.2% due to a better sales mix.

Financial highlights

• Net sales: ¥128.6 billion (down 6.6% YoY).

• Gross profit: ¥16.98 billion (down 3.3% YoY); gross margin 13.2%.

• Operating income: ¥5.55 billion (down 20.6% YoY); operating margin 4.3%.

• Ordinary income: ¥6.05 billion (down 12.5% YoY), aided by ¥0.27 billion in FX gains.

• EPS: ¥157.12 for 1Q FY2025/3 (down from ¥219.63 YoY).

Outlook and guidance

• Full-year forecasts maintained: net sales ¥555.0 billion (+2.3% YoY), operating income ¥26.0 billion (+0.6% YoY), net income ¥18.0 billion (-11.5% YoY).

• EPS forecast for FY2025: ¥342.63 (reflecting a 2-for-1 stock split).

• Annual dividend forecast unchanged at ¥220 per share (pre-stock split basis) or ¥110 per share post-split.

• Demand recovery expected in the second half after continued inventory adjustments in the first half.