Sumitomo Heavy Industries (6302) Q2 2025 earnings summary

Executive summary

• Orders in Q2 FY2025 rose 18% year-over-year to JPY 535.5 billion, reflecting broad-based demand recovery except for semiconductor-related products, while net sales fell 5% to JPY 494.6 billion due to a smaller backlog and weaker Industrial Machinery and Logistics & Construction sales.

• Operating profit dropped 35% year-over-year to JPY 21.7 billion, mainly due to lower sales, negative FX effects, and increased administrative expenses.

• Net profit attributable to owners fell 47% to JPY 12.4 billion, with comprehensive income turning negative.

• Market conditions were resilient in Japan and the US, with Europe showing signs of recovery, but China remained stagnant.

• Segment reconfiguration was implemented to streamline management and promote synergies.

Financial highlights

• Operating profit margin fell to 4.4% from 6.4% year-over-year, with ordinary profit at JPY 20.2 billion, down JPY 13.6 billion.

• Free cash flow improved to JPY 15.8 billion, supported by reduced working capital.

• Cash and cash equivalents at period end increased to JPY 113.0 billion.

• Total assets stood at JPY 1,237.0 billion, with shareholders' equity ratio at 50.5%.

• EPS for the first half was JPY 103.17, down from JPY 193.26 year-over-year.

Outlook and guidance

• FY2025 forecast revised to orders of JPY 1.1 trillion, net sales of JPY 1.05 trillion, and operating profit of JPY 50 billion, all down from previous guidance.

• Operating profit margin expected at 4.8% for FY2025, down from 5.5% in the previous forecast.

• Dividend per share maintained at JPY 125.

• Market recovery anticipated in North America and Europe, but China expected to remain slow.

• Net profit forecast for FY2025 is JPY 25 billion.