Sumco (3436) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 FY2025 reached ¥102.4B, up 9.6% year-over-year and ¥2.4B sequentially, but operating profit fell 31.1% to ¥5.99B and profit attributable to owners dropped 39.7% to ¥3.05B.

• Q1 profits exceeded forecasts due to delayed depreciation, but operating and ordinary profit declined year-over-year amid higher costs.

• AI and data center demand supported 300mm wafers, while legacy and 200mm segments remained weak, with inventory adjustments ongoing.

• Business reforms included reorganizing production for smaller wafers and boosting productivity with AI.

• Market recovery is slow, with customers focused on inventory drawdown rather than new purchases.

Financial highlights

• Q1 CapEx was ¥32.7B, down ¥14B from Q4 and ¥43.5B year-over-year; depreciation was ¥22.8B, up from ¥17.8B year-over-year.

• Operating cash flow was ¥26.7B; free cash flow was negative ¥12.7B due to CapEx outflows.

• Gross margin decreased as cost of sales increased faster than sales; gross profit was ¥19.0B.

• Ordinary profit dropped 46.3% year-over-year to ¥4.89B.

• Basic EPS for the quarter was ¥8.71, down from ¥14.46 year-over-year.

Outlook and guidance

• Q2 FY2025 forecast: sales ¥100B, operating profit zero, ordinary loss ¥1B, net loss ¥2B, with EBITDA margin projected to decline to 26.9%.

• For the six months ending June 30, 2025, net sales are forecast at ¥202.4B (+2.1% year-over-year), but operating profit is expected to fall 71.7% to ¥5.9B and profit attributable to owners to drop 92.1% to ¥1B.

• Depreciation to rise to ¥27.5B in Q2, with forex assumption at ¥145/USD.

• Dividend guidance set at ¥10 interim, year-end undetermined.

• Demand recovery for 300mm wafers remains slow except for leading-edge products; 200mm wafer shipments to stay low.