TDK (6762) Q1 2025 earnings summary

Executive summary

• Net sales rose 3.1% year-over-year to JPY 518.8 bn, driven by ICT and HDD market recovery and yen depreciation.

• Operating profit surged 120% to JPY 57.9 bn, with net profit attributable to owners up 304.9% to JPY 59.6 bn.

• Significant profit growth attributed to higher sales of small capacity rechargeable batteries, HDD components, and passive components for ICT.

• Foreign exchange gains from yen depreciation contributed approximately JPY 8 bn to profit before tax.

• Robust ICT, smartphone, and data center HDD demand offset weakness in industrial and automotive markets.

Financial highlights

• Net profit attributable to owners of parent surged 304.9% year-over-year to JPY 59.6 bn; EPS reached JPY 157.15.

• Operating profit margin improved to 11.2% from 5.2% a year ago; gross profit margin rose to 32.2% from 25.2%.

• Free cash flow increased to JPY 16.9 bn from JPY 7.9 bn in the prior year.

• Cash and cash equivalents at period end were JPY 718.3 bn, up JPY 126.4 bn year-over-year.

• R&D expenses rose 38.9% to JPY 61.0 bn (11.8% of net sales); capex decreased to JPY 42.8 bn.

Outlook and guidance

• FY March 2025 projections unchanged: net sales JPY 2,105.0 bn (+0.1% YoY), operating profit JPY 180.0 bn (+4.1% YoY), EPS JPY 337.35.

• Q2 guidance expects increased sales in small capacity batteries for ICT and HDD suspension assemblies, but a decrease in HDD heads and industrial equipment market sales.

• Annual dividend forecast raised to JPY 120.00 per share; interim dividend at JPY 60/share (pre-split), year-end at JPY 12/share (post-split).

• R&D expenses projected to rise due to reclassification of certain SG&A expenses.

• Exchange rate assumptions for Q2 onward: JPY 140/USD and JPY 156/EUR.