Shinwa (7607) Q2 2025 earnings summary

Executive summary

• Net sales for the second quarter rose 9.8% year-over-year to ¥42.2 billion, driven by strong capital investment in the automotive sector and robust domestic sales, especially in vehicle-mounted battery equipment and autonomous mobile robots.

• Operating income increased 42.9% year-over-year to ¥2.29 billion, with ordinary profit up 34.3% to ¥2.465 billion and profit attributable to owners of parent up 30.1% to ¥1.659 billion.

• Progress in the Fourth Medium-Term Management Plan resulted in firm earnings, with profitability initiatives offsetting overseas weakness, especially in China.

• The company continues to focus on profit improvement and expansion into growth markets under its medium-term management plan.

Financial highlights

• Gross margin improved to 16.1% from 15.0% in the previous year’s second quarter, with gross profit reaching ¥6,813 million.

• Net profit rose 30.1% year-over-year to ¥1.66 billion, and basic earnings per share increased to ¥123.86.

• Domestic sales surged 20.1% year-over-year, now accounting for 69.5% of total sales, while overseas sales declined 8.2%.

• Total assets increased to ¥68.6 billion, mainly from higher cash and inventory.

• Comprehensive income reached ¥1,701 million, up from ¥1,591 million in the prior year.

Outlook and guidance

• Full-year forecast remains unchanged: net sales of ¥81 billion (+4.1% YoY), operating income of ¥4.1 billion (+15.2% YoY), and profit attributable to owners of parent of ¥3 billion (+9.9% YoY).

• Management expects to achieve full-year targets by maintaining profit margins and capturing demand for engineering-driven equipment.

• Annual dividend forecast raised to ¥112.00 per share, with a minimum annual dividend of ¥100 and a payout ratio of at least 50%.