Slide 1: Financial Briefings for the Second Quarter of the Fiscal Year Ending March 2025
TRANSLATION-FOR REFERENCE ONLY- KOKUSAI ELECTRIC Financial Briefings for the Second Quarter of the Fiscal Year Ending March 2025 (April to September 2024) November 11, 2024 KOKUSAI ELECTRIC CORPORATION
Slide 2: Summary of Q2 results
First, here is a summary of Q2 results. Page 4 contains the highlight. Although sales and profits decreased in Q2 compared to Q1, cumulative sales and profits for Q2 exceeded the previous forecast. Specific details are explained in the following pages. 1
Slide 3: Consolidated financial results summary for Q2 and H1
Page 5 is a summary of consolidated financial results for Q2 and H1. Since we consider adjusted profit to be an important management indicator, we will explain them in these items. As explained in our Q1 announcement, we saw some equipment shipments being brought forward from the Q2 to the Q1, which
Slide 4: Factors behind YoY changes in revenue and adjusted operating profit
Page 6 shows the factors behind the YoY changes in revenue and adjusted operating profit for Q2. In Q2, sales of equipment for DRAM and Logic/Foundry increased. The declines in NAND equipment sales, other equipment sales and service revenue were primarily due to a slowdown in equipment shipments, wh
Slide 5: Quarterly sales composition by business
Page 7 shows the quarterly sales composition by business. In Q2, the equipment sales composition ratio expanded due to a marked increase in equipment sales compared to the same period of the previous year. On the other hand, compared to Q1, the concentration of equipment shipments settled down, and
Slide 6: Quarterly sales breakdown by application
Page 8 shows the breakdown by application of sales by quarter for the 300mm equipment that makes up the equipment business and the legacy equipment 200mm or less that is included in the service business. In Q2, sales of equipment for DRAM and logic/foundry increased compared to the same period last
Slide 7: Quarterly revenue by region
Page 9 shows a breakdown of combined equipment and services revenue by region on a quarterly basis. The ratio of sales to China in Q2 was 47% as the concentration of shipments to China subsided. We will explain the future outlook later. 6
Slide 8: R&D expenses, capital expenditures, depreciation and amortization
Page 10 shows quarterly R&D expenses, capital expenditures, and depreciation and amortization costs. R&D expenses for Q2 were JPY3.9 billion, roughly in line with our previous forecast and accounted for 7.9% of net sales. We will continue to invest in the development of next-generation products as p
Slide 9: Balance sheet
Page 11 is the balance sheet. Total assets decreased by JPY13.2 billion from the end of the previous period due to a decrease in cash and cash equivalents related to the acquisition of treasury stock with cash on hand, despite an increase in tangible fixed assets, resulting from the construction of
Slide 10: Quarterly cash flow
Page 12 shows quarterly cash flow. In Q2, operating cash flow improved and free cash flow turned positive, owing to the collections from sales recorded in Q1. Regarding financing cash flow, there was a significant increase due to a cash outflow of JPY18 billion for the purchase of treasury stock. Ca
Slide 11: Balance sheet KPIs
Page 13 shows the major management KPIs related to the balance sheet. The capital adequacy ratio was 50.5% and remained above 50%. Regarding the relationship between cash and debt at the end of Q2, net debt was JPY20.6 billion due to cash outflow for share buyback. Free cash flow is expected to impr
Slide 12: Full-year earnings and dividend forecast overview
Next, I will explain our full-year earnings and dividend forecast for the fiscal year ending March 2025. Page 15 contains the highlights. Currently, demand for DRAM equipment is rising against the backdrop of generative AI spread and other factors. In addition to this, we expect demand for NAND equi
Slide 13: Revised full-year earnings and dividend forecast
Please look at page 16. We have revised our full-year earnings forecasts, raising revenue by 9% from our previous forecast, to JPY 238 billion, up 32% from the previous fiscal year; adjusted operating profit by 11% to JPY 56.6 billion, up 50% from the previous fiscal year; and adjusted net profit by
Slide 14: Forecast sales revenue by 1H and 2H
Page 17 shows a breakdown of sales revenue in the forecast for the FY25/3 by 1H and 2H of the year. The graph shows half-year sales revenue break down into equipment sales to the world, excluding China, equipment sales to China, and service sales. Compared to the previous forecast, H1 sales of equip
Slide 15: Reasons for changes in revised forecast
Page 18 shows the reasons for the increase or decrease in the revised forecast against the previous forecast for the FY25/3. We revised net sales upward by JPY20.5 billion, owing to strong global DRAM equipment sales, equipment sales for Logic/Foundry with recovery trend in advanced nodes, parts sal
Slide 16: Forecast sales composition by business segment
Page 19 shows the sales composition by business segment, reflecting the revised full-year forecast. In this forecast, the pace of sales recovery in the equipment business is expected to be faster than previously expected, and the sales composition ratio is expected to return to normal more quickly.
Slide 17: Forecast sales breakdown by application
Page 20 reflects the revised full-year forecast breakdown by application of sales of 300mm equipment, which comprises the equipment business and legacy equipment of 200mm or less, which is included in the service business. In the current forecast, the sales ratio of DRAM, which is performing well gl
Slide 18: Forecast sales composition by destination
Page 21 shows the sales composition by destination for the full year. For the FY25/3, we are forecasting 48% of total equipment service sales to China, slightly higher than our previous forecast. This is due to higher-than-expected sales of equipment for DRAM in China. We expect the ratio to return
Slide 19: Outlook for the business environment
Page 23 is the outlook for the business environment. In the semiconductor device market, demand for HBM is growing with the spread of generative AI, and we expect the demand for other advanced devices to increase in the future. On the other hand, active Capex spending in China is expected to continu
Slide 20: Outlook by application
Page 24 summarizes our outlook by application. For DRAM, new PORs have been acquired in the highly difficult DRAM deposition process, and new PORs have also been acquired in the treatment process, which had been 3D NAND-centered and are beginning to contribute to sales. This confirms our explanation
Slide 21: Drivers for future growth and development roadmap
On page 25, we show the drivers for future growth, along with our development road map. There are no major changes to what we have described so far. We believe that as semiconductor devices become more complex and three-dimensional, there will be increasing opportunities to take advantage of our exp
Slide 22: Share buyback results and shareholding policy
Finally, please see page 26. This report summarizes the results of the share buyback program implemented to mitigate the impact of the deteriorating supply and demand resulting from the stock sale, as well as our future shareholding policy. We repurchased approximately 5 million shares using JPY18 b