Kokusai Electric (6525) Q2 2025 earnings summary

Executive summary

• Revenue and profits for the first half of FY25/3 rose sharply year-over-year, with 1H revenue up 47.4% to JPY 114.5 billion and net income up 104.8% to JPY 18.1 billion; 2Q saw a sequential decline due to shipment timing.

• Equipment sales increased across all applications year-over-year, driving a 47% rise in total revenue and an 84% increase in adjusted operating income.

• DRAM demand remains strong, driven by generative AI, with Logic/Foundry capital investment for advanced nodes rising.

• Full-year earnings and dividend forecasts were revised upward, expecting 3Q and 4Q to exceed previous projections.

• Gross profit margin and adjusted net income margin both improved year-over-year due to higher sales and a favorable project mix.

Financial highlights

• Adjusted operating income for 1H increased 84.3% YoY to JPY 30.7 billion; 2Q adjusted operating profit was JPY 11.3 billion, up 2.4% YoY.

• Free cash flow turned positive in Q2, supported by collections from Q1 sales.

• Cash and cash equivalents at end-2Q were JPY 69.3 billion, down from JPY 92.6 billion at the start of the period.

• Capital adequacy (equity) ratio remained strong at 50.5%.

• Net debt at end-2Q was JPY 20.6 billion, reflecting share repurchases.

Outlook and guidance

• Full-year revenue forecast raised by 9% to JPY 238 billion, up 31.6% YoY; adjusted operating income forecast increased by 11% to JPY 56.6 billion, up 49.6% YoY.

• Net income forecast raised to JPY 33.3 billion, up 48.8% YoY; annual dividend forecast increased to JPY 36 per share.

• DRAM equipment demand remains strong, with Logic/Foundry and NAND expected to recover in the second half.

• Net cash expected to remain negative through March 2025 due to share buybacks, turning positive in March 2026 or later.

• Equipment and service sales for DRAM, Logic/Foundry, and legacy equipment expected to exceed previous forecasts.