Yageo (2327) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached NT$31.418 billion, up 10.2% quarter-over-quarter and 17.4% year-over-year, exceeding prior guidance due to strong AI and consumer demand.

• Net income attributable to the parent was NT$5.453 billion (17.5% margin), up 18.3% quarter-over-quarter and 46.6% year-over-year; EPS was NT$13.02, up 18.2% sequentially and 46.2% year-over-year.

• Gross margin improved to 35.1%, the highest in two years, up 1.3 points quarter-over-quarter and 1.9 points year-over-year; OpEx was well controlled at 14.5% of sales.

• First half 2024 revenue was NT$59.923 billion, up 13.4% year-over-year, with net income margin at 17% and EPS at NT$24.04, up 27.8% year-over-year.

• EBITDA for Q2 was NT$8.664 billion (27.6% margin), and for H1 2024, NT$15.9 billion (26.6% margin).

Financial highlights

• Cash and cash equivalents rose to NT$92.332 billion, up 10.1% sequentially and 25.1% year-over-year.

• Receivables increased 10% in line with sales; inventory turnover improved from 130 to 120 days.

• Net financial debt/equity improved to 16.7% as of June 30, 2024, down from 18.0% in March 2024; net financial debt/EBITDA decreased to 79.8%.

• ROE (quarterly) increased to 3.9% from 3.4% sequentially; annualized ROE at 14.3%.

• Non-operating items in Q2 posted a net gain of NT$923 million, mainly from FX gains and net interest income.

Outlook and guidance

• Q3 revenue and gross margin guided to low single-digit growth, with stable pricing and improved utilization rates (commodity: 55%→65%, premium: 70%→75%).

• Operating expenses expected to remain controlled, supporting operating income margin improvement.

• No expectation for a sharp V-shaped recovery; gradual positive momentum anticipated.

• Plans to closely monitor supply and demand, increase capacity utilization, and remain optimistic about operational momentum and AI application outlook.

• Despite global inflation and international conflicts, customer inventories are trending healthier.