Renesas Electronics (6723) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue was ¥292.6 billion, down 19.2% year-on-year and 15.3% sequentially; full-year revenue was ¥1,348.5 billion, down 8.2% year-on-year.

• Q4 operating profit was ¥75.4 billion (25.8% margin), with full-year operating margin at 29.5% and net profit at ¥360.4 billion.

• Dividend payout maintained at over ¥50 billion, with 28 yen per share and a payout ratio of 22.9%.

• Altium acquisition completed, with revenue recognition for software shifted to a pro-rata model, causing a temporary revenue dip.

• Automotive segment saw slight year-on-year growth, while industrial infrastructure and IoT declined; inventory management and FX impacts were significant.

Financial highlights

• Q4 2024 gross margin was 54.9%, with full-year gross margin at 56.1%; Q4 EBITDA was ¥98.2 billion, full-year EBITDA ¥486.2 billion.

• Q4 revenue exceeded forecast by 5.1%, mainly due to FX and improved production costs; gross margin was 2.4 percentage points above forecast.

• Free cash flow margin for 2024 was 12.5%.

• GAAP operating profit for Q4 2024 was ¥22.1 billion (7.5% margin); full-year GAAP operating profit was ¥223.0 billion (16.5% margin).

• Adjusted items included PPA effects, stock-based compensation, and other non-recurring items.

Outlook and guidance

• Q1 2025 revenue forecast is ¥309 billion, up 5.6% quarter-over-quarter but down 12.2% year-over-year; gross margin expected at 54%, operating margin at 24%.

• Revenue growth in Q1 driven by automotive and industrial infrastructure, with Altium software revenue recognition change causing a temporary dip.

• From Q2 onward, revenue and margin expected to improve as business expands and contract accumulation continues.

• Both automotive and industrial/infrastructure/IoT segments expected to see further inventory reduction in Q1 2025.

• Management remains cautiously optimistic, expecting to outpace competitors if inventory corrections persist in the industry.