Improved Earnings for Kyocera, but Lowers Forecast

Kyocera Corporation of Kyoto, Japan, today announced its third-quarter financial results for its fiscal year that will end on March 31, 2020. The firm also announced results for the first nine months of its fiscal year.

Nine Months Ended December 31, 2019

Sales revenue was down 1.4 percent, operating profit was up 56.6 percent, and profits were up 27.5 percent.

Document Solutions Group

For its Document Solutions Group, sales revenue for the nine months decreased by 6,311 million yen, or 2.3 percent, to 267,524 million yen compared with 273,835 million yen in the previous nine months.

Kyocera says this was due to the effect of appreciation of the yen, which more than offset the contribution from M&A conducted in the previous fiscal year.

Business profit for the Office group decreased by 2,583 million yen, or 8.6 percent, to 27,498 million yen, compared with 30,081 million yen in the previous nine months, due mainly to the effect of foreign currency fluctuations. Despite this decrease, a double-digit business profit ratio was maintained on the back of improved productivity and cost reductions.

Unit: Millions (except percentages and per-share amounts)

Nine Months Ended December 31,

2018
(FY19)
in JPY

2019
(FY20)
in JPY

Change

2019
(FY20)
in USD

2019
(FY20)
in EUR

Amount
in JPY

%

Sales revenue:

1,214,417

1,196,885

(17,532)

(1.4)

10,881

9,731

Operating profit:

60,576

94,860

34,284

56.6

862

771

Profit before income taxes:

104,100

141,629

37,529

36.1

1,288

1,151

Profit attributable to owners of the parent:

79,419

101,265

21,846

27.5

921

823

Earnings per share attributable to owners of the parent (basic):

219.17

279.58

2.54

2.27

Note on exchange rates: U.S. dollar (USD) and euro (EUR) conversions are provided above as a convenience to the reader, based on the rates of USD1 = JPY110 and EUR1 = JPY123, rounded to the nearest unit (as of December 30, 2019)

According to Kyocera, China’s economic slowdown and continued inventory adjustments led to decreased revenue from the Electronic Devices business during this period, which offset new revenue contributions from M&A in Kyocera’s Industrial & Automotive Components business. As a result, consolidated sales revenue during the nine months ended December 31, 2019 decreased by JPY17,532 (US $159) million, or 1.4 percent, to JPY1,196,885 (U.S. $10,881) million, as compared to the prior-year period.

Despite the lower sales revenue, profit increased year-over-year, due mainly to reduced expenses, led by the absence of approximately JPY68.5 billion (US $623 million) in non-recurring charges from the prior-year period, which included one-time costs in Kyocera’s Solar Energy and Organic Materials businesses.

As a result, operating profit increased by JPY34,284 (US $312) million, or 56.6 percent, to JPY94,860 (U.S. $862) million; profit before income taxes increased by JPY37,529 (US $341) million, or 36.1 percent, to JPY141,629 (US $1,288) million; and profits increased by JPY21,846 (U.S. $199) million, or 27.5 percent, to JPY101,265 (US $921) million, as compared to the prior-year period.

Average exchange rates for the period reflect the Japanese yen’s appreciation of 1.8 percent against the U.S. dollar, to JPY109, and 6.2 percent against the euro, to JPY121, as compared to the prior-year period. As a result, sales revenue and profit before income taxes were reduced by approximately JPY30 billion (U.S. $273 million) and JPY10.5 billion (US $95 million) respectively, as compared to the prior-year period.

Financial Highlights for the Third Quarter

For the three months ending December 31, 2019, Kyocera reported that sales revenue was down 3.9 percent; operating profit was 56.5 billion yen versus a loss for the same period a year ago; and profits were 40.6 billion yen, versus 1.02 billion yen for the same period a year ago.

Unit: Millions (except percentages)

Three Months Ended December 31,

2018
(FY19-Q3)
in JPY

2019
(FY20-Q3)
in JPY

Change

2019
(FY20-Q3)
in USD

2019
(FY20-Q3)
in EUR

Amount
in JPY

%

Sales revenue:

413,779

397,835

(15,944)

(3.9)

3,617

3,234

Operating profit:

(22,025)

34,540

56,565

314

281

Profit before income taxes:

(1,589)

56,416

58,005

513

459

Profit attributable to owners of the parent:

1,025

41,651

40,626

379

339

(See note above regarding exchange rates.)

Forecast for Fiscal Year Ending March 31, 2020

Kyocera’s full-year sales and profit results are expected to miss the forecasts that Kyocera announced on October 31, 2019.

Profitability in the Solar Energy and Organic Materials businesses has improved through the structural reforms implemented in the prior fiscal year. In addition, demand for 5G- and IoT-related products is on an upward trend.

However, automotive and industrial machinery demand is predicted to remain sluggish in many major global markets through the fourth quarter. Kyocera has therefore revised its consolidated financial forecasts as shown in the table below.

Consolidated Forecast: Year Ending March 31, 2020

Unit: Yen in millions (except percentages, per-share amounts and exchange rates)
Fiscal 2019
Results
Fiscal 2020
Forecast
Announced on
October 31,
2019
Fiscal 2020
Forecast
Announced on
January 30,
2020
Change
(%) from
Fiscal 2019
Results
Sales revenue:

1,623,710

1,700,000

1,625,000

0.1

Operating profit:

94,823

140,000

118,000

24.4

Profit before income taxes:

140,610

180,000

165,000

17.3

Profit attributable to owners of the parent:

103,210

125,000

117,000

13.4

Earnings per share attributable to owners of the parent (basic):

284.94

345.21

*

323.02

**

Average USD exchange rate:

111

105

108

Average EUR exchange rate:

128

120

120

*Based on the average number of shares outstanding during the six months ended September 30, 2019
**Based on the average number of shares outstanding during the nine months ended December 31, 2019

Complete details are available here.

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