Disco (6146) Q2 2024 earnings summary

Executive summary

• Net sales for the six months ended September 30, 2024, rose 41.8% year-over-year to ¥179.0B, with 2Q net sales up 33.1% to ¥96.2B, driven by high equipment shipments and generative AI demand.

• Operating income for 1H was ¥75.95B, up 68.7% year-over-year; 2Q operating income was ¥42.6B, up 51.9%.

• Net income for 1H was ¥53.44B, up 63.4% year-over-year; 2Q net income was ¥29.7B, up 48.5%.

• Comprehensive income for 1H increased 56.9% year-over-year to ¥54.74B.

• Gross profit margin for 2Q was 71.7%, and for 1H was 70.8%, reflecting high unit prices and value-added products.

Financial highlights

• Gross profit for 1H was ¥126.73B, up from ¥84.66B year-over-year.

• Free cash flow for 1H was ¥53.8B; cash and cash equivalents at period end were ¥243.6B.

• Net assets increased to ¥436.53B as of September 30, 2024, with an equity ratio of 73.6%.

• Operating margin improved, with 1H operating income at ¥75.95B versus ¥45.01B a year earlier.

• Ordinary income margin for 1H was 41.9%, up 5.2 points year-over-year.

Outlook and guidance

• 3Q FY2024 net sales forecasted at ¥83.9B, with operating income of ¥29.2B and net income of ¥20.8B.

• Revised full-year forecast: net sales ¥262.9B (up 29.3% YoY), operating income ¥105.2B (up 39.6%), net income ¥74.2B (up 52.1%).

• Dividend forecast revised, with annual dividends per share projected at ¥307.00, up from ¥124.00 the previous year.

• Assumed exchange rates: 1 USD = ¥135, 1 EUR = ¥150; currency sensitivity: USD ~¥1.5B, EUR ~¥0.1B (annualized).

• Blade dicers and grinders expected to see 25% QoQ growth in 3Q, while consumables and others forecasted to decline 15%.