Financial analysis of Japanese FA companies for 2Q FY2022 – Weaker yen also a positive factor

October 4, 2022

Staff Editor: Masanobu Nishizuka

The second quarter financial results (from March to May 2022) for the fiscal years ending November/December 2022 of 10 major FA-related companies in Japan have been released. Booming business remains worldwide despite many risk factors and concerns, such as the re-spread of COVID-19 infection, global inflation, and the Russian invasion of Ukraine. The weak yen also has a positive impact on their sales and earnings.

Stable market conditions despite many concerns

The global economy during the second quarter financial period ending November/December 2022 (from March to May 2022) showed a steady resumption of economic activity from the pandemic. Although there had been some restrictions in some areas of China, the economy showed a recovery both domestically and internationally. However, concerns apart from the pandemic still showed no signs of coming to an end. Globally, Russia’s invasion of Ukraine and inflationary trends, especially in the oil and energy sectors, continues. In addition, the exchange rate weakened against the yen. Nevertheless, there remained a recovery in production by companies around the world.

Aircraft bottoming out?

Among the eight companies that use Japanese GAAP, seven companies apart from MARUKA FURUSATO have adopted the “Accounting Standard for Revenue Recognition” from this fiscal year, which has changed the standard for calculating net sales, making simple comparisons with the same period of the previous year no longer possible. The results of those companies that cannot be simply compared with the previous year have been excluded from the calculations, but their results are included in the table.

Most FA companies, including two companies that apply International Financial Reporting Standards (IFRS), performed well. DMG MORI commented, “Demand for automation and full turnkey production accelerated, especially for 5-axis and multi-tasking machines. The weak yen also contributed to a rise in order unit prices compared to the previous year’s average”. OSG also noted, “Automotive-related demand slowed, but demand from the general parts’ industry remained strong. Aircraft-related demand seems to have bottomed out”.

Four of the 10 companies revised their full-year forecasts for sales and net income upward. STAR MICRONICS commented, “Market conditions have been favorable from the third quarter onward. Thanks in part to the impact of the exchange rate, we expect to surpass the previous forecast”.