Renesas Electronics (6723) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was ¥358.8 billion, with gross margin at 56.7% (non-GAAP) and operating profit at ¥110.6 billion (30.8% margin); IFRS operating profit was ¥69.7 billion.

• Automotive segment grew strongly, offsetting declines in Industrial/Infrastructure/IoT, but overall profitability declined year-over-year.

• Channel inventory increased, especially in IIoT, due to weaker sell-through and industry softness.

• Completed Transphorm acquisition in June 2024 and announced/closed Altium acquisition, both expected to be accretive.

• Comprehensive income for the six months rose due to significant foreign currency translation gains.

Financial highlights

• Revenue up 2.0% sequentially but down 2.7% year-over-year; net profit for Q2 was ¥96.7 billion (non-GAAP) and ¥59.8 billion (IFRS).

• EBITDA for Q2 2024 was ¥132.8 billion; free cash flow margin improved sequentially but declined year-over-year.

• Basic EPS for Q2 2024 was ¥33.41, down from ¥51.36 in Q2 2023.

• Dividend of ¥28 per share paid in March 2024; no interim dividend declared for 2024.

• Non-recurring Q2 expense of ¥3 billion for business reorganization.

Outlook and guidance

• Q3 2024 revenue forecast midpoint is ¥348.0 billion, with gross margin at 55.5% and operating margin at 27.5% (non-GAAP).

• Nine-month revenue forecast at ¥1,051.1–1,066.1 billion, down 5.1% to 3.8% year-over-year.

• R&D investment will be maintained despite margin pressure; recovery anticipated from Q4 onwards, but management remains cautious.