Kawasaki Heavy Industries (7012) Q2 2025 earnings summary

Executive summary

• Achieved record-high Q2 revenue and business profit, with revenue for the six months ended September 30, 2024, rising 14.9% year-over-year to ¥884.2 billion and business profit improving to ¥47.8 billion from a loss of ¥32.8 billion.

• Orders received rose to ¥895.3 billion (+¥34.5 billion YoY), driven by Aerospace Systems and Precision Machinery & Robot segments.

• Profit attributable to owners increased to ¥13.7 billion from a loss of ¥23.3 billion year-over-year.

• Previous year’s Q2 was impacted by a ¥58 billion loss related to PW1100G-JM engine issues, distorting YoY comparisons.

• The company is addressing compliance issues in its marine business, with ongoing investigations and reforms.

Financial highlights

• Q2 orders received: ¥895.3 billion; revenue: ¥884.1 billion; business profit: ¥47.7 billion; profit before tax: ¥23.7 billion; profit attributable to owners: ¥13.6 billion.

• Gross profit nearly doubled year-over-year to ¥186.6 billion, with gross margin improving to 21.1% from 11.5% YoY.

• Interest-bearing debt increased by ¥186.1 billion to ¥840.0 billion; net D/E ratio at 109.6%.

• Operating cash flow remained negative but improved YoY; free cash flow was -¥86.7 billion.

• Net cash at period end was ¥127.4 billion, up ¥41.9 billion year-over-year.

Outlook and guidance

• Full-year business profit forecast remains at ¥130.0 billion, with annual dividend unchanged at ¥140 per share.

• Full-year revenue forecast revised down to ¥2,180.0 billion; profit attributable to owners forecast at ¥73.0 billion, with EPS of ¥435.80.

• Orders received for the full year expected to reach ¥2,430.0 billion, up ¥20.0 billion from previous guidance.

• After-tax ROIC projected at 6.5% and ROE at 11.2%.

• Assumed exchange rate for forecasts remains at ¥140 per dollar.