Kaga Electronics Co (8154) Q2 2025 earnings summary

Executive summary

• Net sales for the first half of FY2025/3 declined 5.8% year-over-year to ¥259.0 billion, mainly due to prolonged inventory adjustments and reduced transactions with a major customer in the electronic components business.

• Operating profit decreased by 17.1% year-over-year to ¥11.5 billion, impacted by higher personnel and logistics costs despite a better product mix.

• Net profit fell 30.4% year-over-year to ¥7.9 billion, mainly due to the absence of prior year’s one-time gains from asset sales and acquisitions.

• Both revenue and operating profit exceeded internal plans for the period.

• Comprehensive income fell 36.9% year-over-year to ¥10,709 million.

Financial highlights

• Gross profit margin improved to 13.2% from 12.8% year-over-year, despite a 2.9% decline in gross profit.

• EPS for the half-year was ¥151.15, adjusted for a two-for-one stock split.

• Exchange rate averaged ¥152.63/USD, contributing approximately ¥8 billion to revenue and ¥250 million to operating profit year-over-year.

• SG&A expenses rose 6.3% year-over-year, mainly due to wage increases and logistics costs.

• Ordinary income decreased 19.1% year-over-year to ¥11,278 million.

Outlook and guidance

• Full-year forecasts remain unchanged: net sales ¥555 billion, operating income ¥26 billion, net profit ¥18 billion.

• Progress toward full-year plan at Q2: 46.7% for revenue, 44.2% for operating profit, 44.1% for net profit.

• Inventory adjustments expected to gradually resolve in H2, with demand recovery anticipated.

• FY2025/3 forecasted EPS is ¥342.63, and annual dividend is projected at ¥110 per share (post-split basis).

• Medium-Term Management Plan 2027 targets net sales of ¥800 billion and operating income of ¥36 billion by FY2028.