Yaskawa’s sales in the March to May period rose 18 percent to 142.5 billion yen. By region, sales revenue in China rose 49 percent and 27 percent in the Americas. However, orders, an indicator of future earnings, continued to be negative year-on-year, with orders from China down 27 per cent…

Japan Yaskawa Electric recently announced March to May 2023 consolidated financial results (international accounting standards) show that net profit increased by 13% year-on-year, reaching 11.6 billion yen. The impact of last year’s decline in production due to the outbreak in China is over. In the context of the need to economize in factories, robot sales have increased, while the depreciation of the yen has also played a role. However, orders, a leading indicator, continue to grow negatively and uncertainty remains.

Yaskawa Electric conducts servo motors and industrial robots embedded in machine tools and semiconductor manufacturing equipment. Because its financial results can foreshadow the official release of Japanese manufacturing results in late July, it is highly concerned.

The company’s sales revenue from March to May increased 18 percent to 142.5 billion yen. Supply chain disruptions have subsided, with Yaskawa’s senior executive director, Ayumi Hayashida, explaining that “parts procurement is stable and operating rates have resumed”. By region, China grew 49 percent and the Americas 27 percent.

The strongest performance among divisions was robotics, with sales up 19 per cent. With the transition to pure electric vehicles (EVs), Yaskawa Electric captures the strong demand for equipment investment related to lithium batteries. In areas such as logistics and food, investment in personalization is also increasing against the backdrop of labor shortages, leading to an increase in sales.

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Sales of motion control businesses, such as servo motors, rose 25 percent. Production of inverters that control the motor had been stagnant, but also resumed in March to May.

Operating profit rose 18 per cent to Y16.4bn. Rising costs of raw materials and logistics have been the main factors driving down profits, but the impact has been reduced by shifting costs to prices. Profits were also boosted by the depreciation of the yen in the actual exchange rate, compared with the expected exchange rate of Y130 to the dollar.

However, orders, an indicator of future earnings, continued to show negative year-on-year growth. Orders from March to May fell 18 percent from a year earlier to 137.2 billion yen. Orders from China, in particular, fell 27 per cent. Orders from the Americas were also down 19 percent due to a retaliatory drop in semiconductor demand last year.

Against the backdrop of a slowing global economy and geopolitical risks, Tomohiko Sano of jpmorgan Securities noted that “companies are becoming cautious about investing in equipment”. According to the analysis of orders for China and the Americas, “it is likely to recover after October.”

The forecast for the full year of fiscal 2023 (ending February 2024) remains unchanged. Sales are expected to rise 4 per cent year on year to Y580bn, while net profit is expected to fall 1 per cent to Y51.3bn. The focus will be on the extent to which orders in China can recover as the backlog is digested.