Nippon Filcon has raised its outlook for the year ending November 30, and the change is much more about profit than sales. The company lifted revenue guidance to ¥28.5bn from ¥27.6bn, but raised operating profit to ¥1.4bn from ¥900mn, ordinary profit to ¥1.6bn from ¥1.1bn, and net income attributable to owners to ¥800mn from ¥450mn. Management said the upgrade reflects steady demand in its electronic components and photomask business, lower manufacturing expenses including repair costs, and reduced retirement benefit expenses after a change to the retirement benefit system at a domestic subsidiary in its industrial functional filters and conveyors business.
| Metric | Previous guide | Revised guide | Change |
|---|---|---|---|
| Sales | ¥27.6bn | ¥28.5bn | +3.3% |
| Operating profit | ¥900mn | ¥1.4bn | +55.6% |
| Ordinary profit | ¥1.1bn | ¥1.6bn | +45.5% |
| Net income attributable to owners | ¥450mn | ¥800mn | +77.8% |
That mix matters because sales guidance rose by only ¥900mn from the January plan, while operating and ordinary profit each increased by ¥500mn. Nippon Filcon is not forecasting a revenue surge so much as a better conversion of revenue into profit, helped by steadier electronics demand and cost lines that have come in lighter than expected.
The half-year results released the same day help show where that improvement is coming from. For the six months to May 31, consolidated sales rose 7.0% to ¥14.36bn and operating profit climbed to ¥834mn from ¥282mn a year earlier. The electronic components and photomasks segment reported ¥2.4bn in external sales, up 10.9%, and ¥486mn in operating profit, up 234.9%. Nippon Filcon said sales of products for communication devices were particularly strong, while depreciation fell after an impairment charge booked at the end of the previous year.
The larger industrial functional filters and conveyors segment also contributed, with external sales of ¥10.19bn, up 4.7%, and operating profit of ¥606mn, up 39.8%. The company said retirement benefit expenses fell at a domestic consolidated subsidiary after the system change, and sales of conveyor belts for the food industry increased in China.
What to watch next is whether the electronic-components and photomask demand behind the upgrade stays firm. Nippon Filcon repeated that the revised outlook is based on information currently available and actual results may differ. It left its dividend forecast unchanged at ¥28 a share for the year, according to the half-year release.