Sumco (3436) Q3 2024 earnings summary

Executive summary

• Q3 operating and ordinary profit slightly exceeded forecasts due to lower costs and delayed depreciation, while net sales for Q3 2024 were ¥98.4B, slightly below forecast; year-to-date net sales declined to ¥296.6B, down 7.5% year-over-year, with operating profit down 51.5% to ¥29.9B and profit attributable to owners of parent down 72.4% to ¥16.2B.

• Q4 sales are expected to decline sequentially, impacted by periodic maintenance and holidays.

• AI and data center demand are driving strong growth in leading edge wafers, while legacy, automotive, and consumer applications remain weak.

• China’s increased domestic wafer production is clouding market visibility and impacting legacy application recovery.

• The company is focusing on technology development and productivity improvements, including AI utilization, to maintain competitiveness.

Financial highlights

• Q3 sales: JPY 98.4 billion; operating profit: JPY 9.1 billion; ordinary profit: JPY 5.6 billion; net profit: JPY 3.6 billion.

• Nine-month sales: JPY 296.6 billion; operating profit: JPY 29.9 billion; ordinary profit: JPY 26 billion; net profit: JPY 16.2 billion.

• Q3 operating income fell JPY 3.1 billion sequentially, mainly due to increased depreciation and negative forex impact.

• Year-on-year, nine-month sales fell JPY 24.2 billion and operating profit dropped JPY 31.9 billion.

• Gross profit for the nine months was ¥56,355 million, down from ¥88,015 million year-over-year.

Outlook and guidance

• Q4 forecast: sales JPY 97 billion, operating income JPY 5 billion, ordinary income JPY 7 billion, net profit JPY 4 billion.

• Full-year guidance: sales JPY 393.6 billion, operating profit JPY 34.9 billion, ordinary profit JPY 33 billion, net profit JPY 20.2 billion.

• Annual dividend per share guided at JPY 21, with a payout ratio of 38.9%.

• Depreciation expected to increase to JPY 23 billion in Q4 and JPY 79 billion for the full year.

• Recovery in demand for 300mm wafers is expected to be gradual, with ongoing weak demand for smaller wafers and end products.