YAMATO KOGYO (5444) Q1 2025 earnings summary

Executive summary

• Group-wide sales volume fell 15.6% year-over-year to 1.29 million tons due to intensified competition from low-cost Chinese steel exports and softening global demand.

• Net sales declined 19.9% year-over-year to 340 billion yen, with operating profit margin dropping 5.1 percentage points to 4.6%.

• Ordinary profit was 24.6 billion yen, nearly flat year-over-year, supported by cost reductions, a weak yen, and strong US affiliate performance.

• The business environment remained challenging due to softening global steel markets, weak demand in China, and intensified competition from Chinese products, especially in ASEAN.

• Acquisition of PT Garuda Yamato Steel (GYS) in Indonesia was completed, with related costs impacting Q1 results; GYS will be consolidated from Q2 onward.

Financial highlights

• Operating profit margin was 4.6%, down 5.1pp year-over-year; ROE was 13.2%, down 3.3pp.

• Capital adequacy ratio stood at 82.9%, down 3.0pp year-over-year.

• Equity in earnings of affiliates rose 6.7% year-over-year to 17.1 billion yen, driven by strong US business.

• Comprehensive income surged to 41,972 million yen, up 74.6% year-over-year, mainly due to foreign currency translation adjustments.

• Profit attributable to owners of parent decreased 4.0% year-over-year to 17.5 billion yen.

Outlook and guidance

• FY2025/3 full-year forecast revised upward due to a strong start in Indonesia and a weak yen, despite a deteriorating global steel market.

• Net sales forecast at 1,780 billion yen (+8.9% YoY), ordinary profit at 81.0 billion yen (-18.4% YoY), and profit attributable to owners at 57.0 billion yen (-18.6% YoY).

• Forecasts revised: sales and profits expected to decrease year-over-year in most regions except Indonesia, where growth is anticipated.

• Annual dividend forecast unchanged at 400 yen per share, including a 100 yen commemorative dividend, targeting a 40% payout ratio.