Sumitomo Chemical Company (4005) Q1 2025 earnings summary

Executive summary

• Core operating income turned positive for the first time in six quarters, reaching ¥5.7 billion in Q1 FY2024 compared to a loss of ¥53.6 billion in Q1 FY2023.

• Net income attributable to owners of the parent was ¥24.4 billion, reversing a loss of ¥33.2 billion in Q1 FY2023.

• All business segments reported higher core operating income year-over-year, with a record profit in IT-related Chemicals and a significant reduction in losses at Pharmaceuticals.

• Q1 FY2024 sales revenue rose by ¥49.0 billion year-over-year to ¥612.1 billion, with all profit categories improving from Q1 FY2023.

• Despite a large loss at Petro Rabigh, overall profit was achieved, signaling a solid start toward a V-shaped recovery for FY2024.

Financial highlights

• Sales revenue rose 8.7% year-over-year to ¥612.1 billion.

• Operating income improved to ¥11.5 billion from a loss of ¥71.7 billion in Q1 FY2023.

• Net income attributable to owners of the parent was ¥24.4 billion, up ¥57.5 billion year-over-year.

• ROE improved to 2.5% from -2.8% year-over-year.

• Free cash flow was ¥70.2 billion, a significant turnaround from negative ¥145.4 billion in Q1 FY2023.

Outlook and guidance

• Q1 sales revenue achieved 22.9% of the full-year forecast, with net income already exceeding the annual target due to foreign exchange gains and strong core operating profit.

• Full-year FY2024 guidance maintained: sales revenue ¥2,670.0 billion, core operating income ¥100.0 billion, operating income ¥70.0 billion, net income attributable to owners of the parent ¥20.0 billion, and basic EPS ¥12.23.

• No change to previously announced forecasts; dividend forecast for FY2024 is ¥9.00 per share.

• Management anticipates a full-scale recovery in semiconductors in the second half of FY2024 and expects continued improvement in methionine market conditions.