Kobe Steel (5406) Q2 2024 earnings summary

Executive summary

• Net sales for the first half of FY2024 were ¥1,248.5–1,248.6B, with ordinary profit at ¥70.9–71.0B, both down year-on-year due to a challenging business environment, especially in automotive and electric power.

• Profit attributable to owners fell to ¥56.5–56.6B, mainly from lower gains on asset sales and weaker segment performance.

• Operating profit for the first half was ¥77.7B, down 15.7% year-on-year.

• Comprehensive income dropped 42.5% year-on-year to ¥72.7B.

• Full-year FY2024 forecast revised: net sales at ¥2,600.0B, ordinary profit at ¥130.0B, and free cash flow at negative ¥70.0B.

Financial highlights

• First half net sales decreased by ¥5.2B year-on-year; ordinary profit dropped by ¥20.6B to ¥70.9–71.0B.

• Basic earnings per share for the six months was ¥143.35, down from ¥203.44 a year earlier.

• Total assets at September 30, 2024, were ¥2,847.3B, down ¥72.4B from March 31, 2024.

• Net assets increased by ¥51.9B to ¥1,179.2B, with an equity-to-asset ratio of 38.9%.

• Cash and deposits decreased to ¥195.6B from ¥278.8B at the previous fiscal year-end.

Outlook and guidance

• Full-year net sales forecast set at ¥2,600.0B; ordinary profit forecast at ¥130.0B; operating profit projected at ¥140.0B.

• Profit attributable to owners of parent is forecast at ¥120.0B, up 9.5% year-on-year.

• Basic earnings per share for the full year is expected to be ¥304.03.

• Free cash flow forecast at negative ¥70.0B; gross D/E ratio to rise to ~0.85x.

• Annual dividend policy unchanged at ¥90/share; interim dividend of ¥45/share confirmed.