Yaskawa Electric’s March-August Net Profit Increases 12%, Chinese Demand Slows

Japan’s YASKAWA Electric’s March-August 2022 consolidated financial report (International Accounting Standards) released on October 7 showed that net profit increased by 12% over the same period of the previous year to 23.7 billion yen. Focusing on pure electric vehicles (EVs), purchases of equipment such as Robots remained strong. But in the Chinese market, demand for motors has come to an end as the economy slows. Combined with higher raw material and logistics costs, it has slightly lowered its profit forecast for the full year of fiscal 2022 (ending February 2023).

Sales revenue rose 10 percent to 263.5 billion yen. The robotics business achieved both sales and profit growth and remained strong. On the other hand, the operating income of the motion control business, which is the main force centered on the motor, increased by 4%, but the operating profit decreased by 20%. In China, where profit margins are relatively high, sales to general industries such as home appliances declined, which had a negative impact.

Yaskawa Electric’s March-August Net Profit Increases 12%, Chinese Demand Slows

Hiroshi Ogasawara, chairman and president of Yaskawa Electric, told the Chinese economy at the same day’s earnings conference that “exports are decreasing, and as a whole, they are no longer as strong as before.” In response to the slowdown in the world economy, “there is currently no impact on business.” In response to the prospect, “there will be no rapid cooling of investment”, but it is said that in China, shipments will be partially delayed according to households’ capital turnover.

In addition, the increase in raw material costs and logistics costs has also become a burden. Regarding semiconductors, etc., in order to make up for the shortage of supply, we purchased parts that are circulating in the market at a higher price. Purchase prices for copper wire and magnets are also rising.

The company’s senior executive director, Murakami, said on Tuesday that “cost transfer is being accelerated, but there is a time lag between new orders (that have completed price increases) being included in performance.” After subtracting the portion absorbed through price increases, the increase in costs led to a drop in profit of 3.5 billion yen in the March-August period.

Yaskawa Electric’s March-August Net Profit Increases 12%, Chinese Demand Slows

Yaskawa Electric Equipment

The impact of cost increases is expected to reach 6.5 billion yen for the full year of fiscal 2023. In Yaskawa Electric’s performance expectations, sales revenue was set at 550 billion yen, a year-on-year increase of 15%, 25 billion yen higher than previously expected. Net profit, on the other hand, was 51.5 billion yen, up 34%, down 1 billion yen. Although the operating profit growth effect brought about by the depreciation of the yen increased to 11.6 billion yen from the 7.5 billion yen planned at the beginning of the period, it did not offset the increase in costs.

Orders from June to August, which are indicative of the performance prospects, increased by 21% compared with the same period of the previous year, reaching 166.3 billion yen. By region, China grew by 12%, the Americas by 48% and Europe by 15%. Orders exceeded quarterly operating income, and backlogs were increasing, but the difference fell to 23.1 billion yen, less than March-May (47.3 billion yen).

On the same day, it was also announced that it will build a new plant for inverter components such as air conditioners in Fukuoka Prefecture. The investment is expected to be 50 billion to 60 billion yen. Yaskawa Electric’s President Hiroshi Ogasawara said, “We will slightly change the previous idea of ​​sourcing parts from the world, increase the ratio of independent production (parts), and reduce our dependence on China.” It intends to drive improved profit margins through in-house production.

The Links:   SGMPH-04A1A-YR61 3HNM 11649-1 ELECTRONIC

Published on 01/23/2023