Sumitomo Osaka Cement (5232) Q2 2025 earnings summary

Executive summary

• Revenue and net sales declined in the first half of FY2024/FY2025 due to lower cement and advanced materials sales, but operating income improved on cement price hikes and lower coal prices.

• Net income dropped sharply year-over-year, mainly due to the absence of prior period gains from the sale of cross-shareholdings and lower extraordinary gains.

• Domestic cement demand fell 6% year-over-year, impacted by labor shortages and regulatory changes, while exports rose 22.8%.

• The group continued its medium-term management plan, focusing on profitability improvements, growth in electronic materials, and new business development in decarbonization.

Financial highlights

• Interim/first half sales were ¥108.6 billion, down ¥1.2 billion or 1.1% year-over-year, mainly due to lower cement and advanced materials sales.

• Operating income for Q2/FY2024 was ¥2.3 billion, up year-over-year but below initial forecasts.

• Net income for the interim period was ¥940 million, down ¥4,940 million or 84% year-over-year.

• Full-year FY2024 forecast: sales ¥223.8 billion, operating income ¥8.4 billion, net income ¥7.8 billion, all revised downward.

• Comprehensive income for the period was ¥665 million, down 88.5% year-over-year.

Outlook and guidance

• Full-year domestic cement demand expected to remain weak, with continued cost increases and downward revisions to sales, operating income, and net income forecasts.

• Sales for FY2024 forecast at ¥223.8 billion (up 0.6% year-over-year), operating income at ¥8.4 billion (up 15.8%), but net income expected to drop 49.2%.

• Dividend per share forecast remains unchanged at ¥120.

• Target of ¥21.4 billion company-wide operating income for FY2025 remains.

• The full-year earnings forecast is under review due to recent results and market conditions.