Seiko Epson recorded ¥17.3bn of approved US tariff refunds as a reduction in cost of sales in the six months to September, according to its interim earnings report. The company says the US Supreme Court invalidated duties imposed under the International Emergency Economic Powers Act, and that US Customs and Border Protection began processing refund claims through its CAPE system (Phase 2) on June 29. Some US subsidiaries filed, and review of those claims was completed in the period.
The refund flows straight into business profit, which Epson defines as revenue less cost of sales and selling and administrative expenses. In the July-September quarter the company's earnings deck puts the refund's contribution at ¥17.3bn within business profit of ¥45.0bn, against ¥17.7bn a year earlier. For the half-year, business profit was ¥67.2bn. The report states the amount recognised, not when the cash arrives.
Why business profit guidance held
Full-year guidance for revenue (¥1.51tn) and business profit (¥105.0bn) is unchanged. Operating profit guidance rose to ¥103.0bn from ¥101.0bn, and net profit to ¥72.0bn from ¥69.0bn. Epson's deck says it has added further materials and oil costs, and has also written in Phase 3 refunds that have newly become claimable, so those offset within business profit. The deck says the net profit upgrade reflects an expected gain on an overseas factory sale, booked in other operating income, which sits below business profit. Neither the report nor the deck gives the gain's size or the Phase 3 amount.
Not a demand signal
The deck cites the refund in the quarterly profit gains of industrial and robotics, office and home printing, and visual and lifestyle. Precision Innovation's gain came from volume, and its full-year segment profit forecast rises to ¥61.0bn from ¥55.0bn. Office and home printing is cut to ¥54.0bn from ¥58.0bn on component shortages.