Recovering demand from semiconductor manufacturing equipment and machine-tool customers has prompted Senju Denki to raise its consolidated outlook for the year ending October, even though construction and electrical-distribution sales are still being held back by higher materials costs and labor shortages.
The company now expects full-year sales of ¥154 billion, operating profit of ¥11.2 billion, ordinary profit of ¥11.7 billion and net profit of ¥8.5 billion. That is up from the December forecast of ¥144 billion, ¥10.7 billion, ¥11.0 billion and ¥7.7 billion respectively, with sales guidance lifted 6.9% and net profit guidance 10.4%. The revised plan also sits above last year's actual results of ¥135.591 billion in sales and ¥6.717 billion in net profit.
Management said the change reflects a stronger-than-expected second quarter and an expectation that demand from semiconductor manufacturing equipment and machine-tool customers will keep recovering. In the first half, parent-only sales rose 11.7% from a year earlier to ¥72.97 billion, ordinary profit climbed 15.7% to ¥5.539 billion, and interim net profit rose 13.7% to ¥3.769 billion. The recovery is not broad based yet. Senju Denki said construction and electrical-distribution demand continued to suffer from project delays linked to cost inflation and labor shortages.
Shareholders are getting a modest but clear reward for the better tone. Senju Denki set its interim dividend at ¥80 a share, up from the previous ¥75 plan, and raised its year-end dividend forecast to ¥80 from ¥75, taking the annual dividend plan to ¥160 a share from ¥150. The interim payout is scheduled to take effect on July 2, and the company said its basic policy is to maintain stable dividends while considering consolidated earnings and retained earnings.
For readers tracking Japan's industrial cycle, the interesting question is durability. Right now, two customer groups are doing the lifting. If semiconductor-equipment and machine-tool demand keeps firming, Senju Denki has room to defend both earnings and cash returns. If that recovery fades, the weaker construction side becomes harder to ignore. The company also cautioned that its forecasts and dividend plan are based on information available on June 4 and may differ from actual results.