Nihon Kohden Corporation (6849) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 FY2024 declined 5.1% year-over-year to ¥46.2 billion, with both domestic and overseas sales decreasing.

• Operating income turned negative at -¥1.25 billion, compared to ¥2.2 billion profit in Q1 FY2023, mainly due to lower sales and gross margin deterioration.

• Ordinary income dropped 71.1% year-over-year to ¥1,674 million, and net income attributable to owners fell 79.8% to ¥766 million.

• Both domestic and overseas sales decreased, with notable declines in Japan (-2.2%) and international markets (-9.9%).

Financial highlights

• Gross profit margin decreased from 50.0% to 47.3% year-over-year, impacted by lower IT system sales and inventory write-downs.

• SG&A ratio increased to 50.0% from 45.5% year-over-year.

• Free cash flow was negative at -¥1.66 billion, down from ¥3.91 billion in the prior year.

• Cash and cash equivalents at period end were ¥46.8 billion, down ¥3,083 million from prior year-end.

• Cash flows from operating activities were negative ¥544 million, a reversal from positive ¥4,991 million last year.

Outlook and guidance

• 1H FY2024 net sales forecast revised down to ¥102.0 billion, a 1.5% year-over-year decline.

• Operating income for 1H forecasted at ¥3.0 billion, down 60% year-over-year.

• Full-year FY2024 guidance reaffirmed: net sales ¥229.0 billion (+3.2%), operating income ¥23.0 billion (+17.4%).

• Sales and profit expected to be more concentrated in 2H FY2024.

• Earnings per share forecast (post-split) is ¥95.36 for FY2024.