Kawasaki Heavy Industries (7012) Q1 2025 earnings summary

Executive summary

• Q1 FY2024 revenue rose 9.6% YoY to ¥444.2B, with record-high Q1 revenue driven by yen depreciation and strong Aerospace, Energy, and Robotics segments.

• Business profit increased 65.2% YoY to ¥16.9B, and net profit attributable to owners surged 69.2% to ¥15.4B, benefiting from foreign exchange gains.

• Orders received were stable at ¥456.8B, with growth in Energy and Robotics offset by a decline in Aerospace.

• Aerospace Systems and Precision Machinery & Robot segments saw significant profitability improvement, while Powersports & Engine faced higher costs and recall expenses.

Financial highlights

• Revenue rose to ¥444.2B (+¥38.8B YoY); business profit reached ¥16.9B (+¥6.6B YoY, margin 3.8%).

• Gross profit rose to ¥85.4B from ¥66.1B YoY, with margin improving to 19.2% (from 16.3% YoY), aided by yen depreciation.

• Operating cash flow turned positive at ¥23.6B, up ¥46.0B YoY, supported by advances in aerospace despite higher inventories.

• CAPEX increased to ¥33.9B (+¥8.0B YoY); R&D expenses rose to ¥13.6B (+¥2.3B YoY).

• Total assets increased to ¥2,815.4B, and equity attributable to owners reached ¥656.8B.

Outlook and guidance

• FY2024 revenue and profit forecasts unchanged: revenue ¥2,250B, business profit ¥130B (margin 5.8%), net profit ¥78B.

• Orders received forecast revised up to ¥2,410B due to higher Ministry of Defense demand.

• Dividend forecast for FY2025 is ¥140 per share, up from ¥50 in FY2024.

• After-tax ROIC expected at 6.7% (up from 2.8% in FY2023).

• Full-year profit forecast seen as achievable with accelerated initiatives from Q2 onward.