#Japan #financial results #DENSO #Kariya #Mobility Supplier

DENSO's Financial Performance in Q3 of Fiscal Year 2024

DENSO, a prominent player in the mobility supply sector, unveiled its financial performance for the third quarter, closing on December 31, 2024. Despite facing challenges such as a decline in vehicle production in Asia and temporary shutdowns by Japanese clients, the company recorded substantial operating profit growth, demonstrating its effective cost management and foreign exchange gains.

Financial Highlights

In the third quarter, DENSO's consolidated revenue amounted to approximately 5,288.4 billion yen (around $33.5 billion), marking a slight decline of 1.2% compared to the previous fiscal year. However, the company's consolidated operating profit soared to 401.6 billion yen (approximately $2.5 billion), reflecting an impressive increase of 68.3%. Furthermore, profit attributable to the parent company's owners rose to 312.7 billion yen (about $2.0 billion), up 78.1% year-on-year.

Yasushi Matsui, CFO and Executive Vice President at DENSO, highlighted that although revenue saw a decrease due to reduced vehicle production in Asia, the yen's reduced depreciation played a crucial role in helping the company maintain a strong overall performance. Additionally, they credited the significant operating profit increase to successful foreign exchange strategies and cost control initiatives even amid rising expenses for materials and parts.

Regional Breakdown

When examining the financial results by region, various trends emerge, reflecting different market conditions:

• - Japan: Revenue dropped slightly to 3,121.8 billion yen (approximately $19.8 billion), a decrease of 0.8% from the previous year. Nonetheless, operating profit skyrocketed to 177.7 billion yen ($1.13 billion), representing a staggering increase of 694.6%.
• - North America: The region displayed notable growth, with revenue increasing by 6.3% to 1,366.4 billion yen (approx. $8.7 billion), and the operating profit jumped by 163.6% to 72.5 billion yen ($459.6 million).
• - Europe: Facing challenges, revenue fell to 536.7 billion yen (around $3.4 billion), a decline of 5.9%, and operating profit decreased significantly by 78.1% to 4.9 billion yen ($31.0 million).
• - Asia: Similarly, revenue in this region plunged to 1,462.8 billion yen (approximately $9.3 billion), down 3.8%, while operating profit dipped by 15.8% to 125.9 billion yen ($797.4 million).
• - Other Areas: Fortunately, other regions saw revenue growth to 89.8 billion yen ($0.6 billion), a rise of 9.6%, with operating profit climbing 23.4% to 18.6 billion yen ($117.9 million).

Forecast for the Fiscal Year 2025

Looking ahead, DENSO revised its full-year forecasts for the fiscal year ending March 31, 2025. Revenue expectations are projected at 7,090.0 billion yen ($44.9 billion), a slight increase of 70.0 billion yen (1.0%) from previous estimates. Operating profit is expected to remain steady at 550.0 billion yen ($3.5 billion). The improvement in revenue is attributed to actual foreign exchange gains observed in the third quarter, while the operating profit forecast holds firm amid rising costs for parts, materials, and quality assurance.

As we near the end of the fiscal year, DENSO remains committed to leveraging its strengths and remaining agile in the face of ongoing market challenges, preparing itself for continued growth in the rapidly evolving mobility industry.