Shinwa (7607) Q4 2024 earnings summary

Executive summary

• Net sales reached a record-high ¥77.8 billion for FY ending August 2024, up 2.3% year-over-year, driven by strong automotive demand and favorable currency effects.

• Operating income declined 28.7% year-over-year to ¥3.56 billion due to lower gross margins and increased expenses.

• Net profit attributable to owners of parent decreased 23.9% year-over-year to ¥2.73 billion, reflecting intensified competition and higher costs.

• Domestic sales ratio rose to 65.4% as overseas sales, especially in China, dropped sharply.

• Comprehensive income decreased 10.3% year-over-year to ¥3.68 billion.

Financial highlights

• Net sales: ¥77.8 billion (+2.3% YoY); Operating income: ¥3.56 billion (-28.7% YoY); Net profit: ¥2.73 billion (-23.9% YoY).

• Gross margin fell to 15.5% from 17.0% the previous year; gross profit was ¥12.1 billion.

• ROE declined to 6.8% from 9.5% last year; EPS was ¥203.93.

• Total assets increased to ¥65.6 billion (+¥6.6 billion YoY); net assets at ¥41.6 billion.

• Cash flows from operating activities increased to ¥3.97 billion; cash and cash equivalents at year-end rose to ¥19.62 billion.

Outlook and guidance

• FY2025 guidance: Net sales ¥81.0 billion (+4.1% YoY), operating income ¥4.1 billion (+15.2% YoY), net profit ¥3.0 billion (+9.9% YoY).

• Basic earnings per share is projected at ¥224.05 for the next fiscal year.

• Growth expected from continued automotive investment and semiconductor sector recovery.

• Overseas subsidiary in India to be consolidated from FY2025.