Chip-resistor maker KOA CORPORATION raised its full-year operating-profit forecast by 89% and lifted its annual dividend forecast to ¥63 a share, up from ¥39, after AI-related and industrial-equipment orders drove a stronger-than-expected first quarter.
A strong opening quarter
For the three months to June, KOA reported net sales of ¥20.88bn, up 23.9% from a year earlier, operating profit of ¥851mn, up 70.2%, and net profit attributable to shareholders of ¥1.629bn, up 288.4%. Part of that net-profit jump was a one-off: KOA booked a ¥745mn tax adjustment gain tied to its decision to dissolve and liquidate its German subsidiary, VIA electronic GmbH. Orders received in the quarter rose to ¥24.57bn and the backlog reached ¥17.36bn, both sharply higher than a year earlier, and the company's book-to-bill ratio climbed to 1.18, its highest level since the third quarter of fiscal 2021.
Guidance moves, and by how much
On the back of that quarter, KOA raised both its half-year and full-year forecasts.
| Metric | Previous Forecast | Revised Forecast | Change |
|---|---|---|---|
| First-half net sales | ¥38.6bn | ¥43.0bn | +11.4% |
| First-half operating profit | ¥1.06bn | ¥2.54bn | +139.6% |
| First-half net profit | ¥3.36bn | ¥5.25bn | +56.3% |
| Full-year net sales | ¥77.4bn | ¥87.3bn | +12.8% |
| Full-year operating profit | ¥2.83bn | ¥5.36bn | +89.4% |
| Full-year net profit | ¥4.78bn | ¥7.74bn | +61.9% |
| Annual dividend per share | ¥39.00 | ¥63.00 | +¥24.00 |
The company was specific about where the demand is coming from. For the second quarter and beyond, it cited steady demand from distributors in Europe and the United States, automotive demand in China, and industrial-equipment and AI-related-equipment demand across Japan, China and the rest of Asia; for the full year, it added industrial-equipment demand in Europe. KOA did not describe a market-wide component upcycle, only these specific end markets.
The dividend and the yen
KOA raised its interim and year-end dividend forecasts each by ¥12, to ¥31.50 apiece, taking the annual total to ¥63 from a previously guided ¥39. The company's stated policy sets an annual dividend floor of ¥30 and targets a payout ratio of around 30% of profit; its own supplementary materials put the year's implied payout ratio close to that target.
The revised guidance assumes an exchange rate of ¥159 to the dollar from the second quarter onward, weaker than the rate KOA had planned around in April. A softer yen flatters overseas sales once translated into yen, but KOA also flagged a drag from rising precious-metal prices, which limited how much of the first quarter's sales increase reached the operating-profit line. As with any forecast, the company cautioned that actual results could differ from these assumptions.