Sumitomo Electric Industries : FY2023 1st half results and annual forecasts (November 13, 2023)

FY2023 1st half results and annual forecasts

November 13, 2023

Table of Contents

１．Performance for the First Half of FY2023

１．Overview of Consolidated Results

２．First-half Performance Trends

３．Sales and Operating Income by Segment

２． Annual Forecast for FY2023

１．Summary of the Business Environment

２．Forecast of Consolidated Results

３．Full-year Performance

４．Sales and Operating Income by Segment

３．Status and Initiatives by Segment

１．Environment and Energy

２．Info-communications

３．Automotive

４．Electronics

５．Industrial Materials

４．ROIC by Segment

５．Dividends

６．Toward Enhancing Corporate Values

１．Initiatives to Improve ROIC

ー１．Initiatives to Improve Earnings ー２．Initiatives to Improve Asset

Efficiency

ー３．Free Cash Flow

２．Mid-Term Management Plan 2025

Key Indicators and Targets

３．Corporate Social Contribution Activities

（Reference）

・First Half Performance (by Segment)

・Whole Year Performance (by Segment)

・Operating Income Increase/Decrease

Factors (First Half)

・Operating Income Increase/Decrease

Factors (Full-year)

・Region-specific,Segment-specific Capital

Investment

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１－１．Overview of Consolidated Results

bn

Net Sales

Operating Profit

Ordinary Income

Profit Attributable to Owners of the Parent

Dividend(/share)

FY2021	FY2022	FY2023	FY2023
1H	1H	1H	1H	Growth
Actual	Actual	Plan	Actual
1,570.4	1,891.1	1,950.0	2,072.1	+10%
46.1	49.7	50.0	67.3	+35%
60.3	60.9	44.0	60.8	(0%)
32.4	35.1	22.0	26.7	(24%)
25	25	25	25

Sales of wire harnesses, anti-vibration rubber, power cables, and other products increased 10% year-on-yearand reached a record high in the first half of the year due to the impact of yen depreciation in addition to sales expansion.

Operating income increased year-on-year as a result of increased sales, as well as drastic cost reduction and improvement of selling prices, exceeding the published forecast and reached a record high for the first half of the year.

Although net income decreased due to an increase in interest expenses and an extraordinary profit in the previous period, the published forecast was achieved.

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１－２．First Half Performance Trends

Record-high operating income in both 2Q (July-September) and 1H (April-September)

（¥bn）									2,072.1
							1,891.1
		1,439.4		1,459.2 1,528.4 1,523.8		1,570.4		Sales1,950.0
	1,310.5	1,312.1
					1,239.3		OP	67.3	Plan
				65.7	64.3
	47.9	52.9	47.1	27.8		46.0		46.1	49.7	18.950.0
1Q		31.3
	22.1						19.0
21.8	21.2			19.4		29.0
									48.4
2Q				37.9	32.9
26.1	30.7	25.8	26.5	25.7		30.7
		17.2

(37.2)

(11.4)

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

FY2022

FY2023

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１－３．Sales and Operating Income by Segment

The automotive segment significantly exceeded the forecast announced at the beginning of the year due to a recovery in automobile production and improved productivity. On the other hand, the Info- communications and Industrial Materials segments failed to reach the levels announced at the beginning of the year due to a decline in orders for core products.

￥bn

Environment

and Energy

Info- communications

Automotive

Electronics

Industrial Materials and Others

Total

FY2022	FY2023		FY2023	Growth	Difference
1H		1H		1H		③－①	③－②
Actual①	Plan➁		Actual③
Sales	OP	Sales	OP	Sales	OP	Sales	OP	Sales	OP
435.0	12.6	450.0	8.0	448.7	12.2	+13.8	(0.4)	(1.3)	+4.2
121.3	12.9	110.0	0.0	102.4	(0.8)	(18.9)	(13.7)	(7.6)	(0.8)
1,016.7	△ 8.0	1,100.0	20.0	1,214.6	32.3	+197.9	+40.3	+114.6	+12.3
178.2	17.7	160.0	11.0	175.5	14.5	(2.6)	(3.2)	+15.5	+3.5
185.2	15.0	180.0	11.0	179.9	9.0	(5.2)	(6.1)	(0.1)	(2.0)
1,891.1	49.7	1,950.0	50.0	2,072.1	67.3	+181.0	+17.6	+122.1	+17.3

※Differences between the aggregate of all segments and Total are consolidated eliminations.

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２－１．Summary of the Business Environment

Although there are concerns about a slowdown in the global economy due to rising global prices, prolonged monetary tightening, and a further increase in political and geopolitical risks,

• Progress of decarbonized society continues, investment in energy infrastructure and renewable energy is brisk
• Global automobile production is expected to recover in the second half of the year and beyond as parts shortages are resolved.
• In the information and telecommunications sector, demand is temporarily stagnant due to customers' investment restraints and inventory adjustments, but solid growth is expected in the medium term due in part to the creation of new demand from the generative AI.

Earnings forecast revised upward based on 1H results and future outlook.

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２－２．Forecast of Consolidated Results

bn Net Sales Operating Profit

Ordinary Income

Profit Attributable to Owners of the Parent

Dividend(/share)

USD

EUR

Copper

FY2022	FY2023	FY2023
	Previous	Revised
Actual①	Plan➁	Plan③
4,005.6	4,100.0	4,300.0
177.4	180.0	200.0
173.3	170.0	183.0
112.7	100.0	110.0
50	50	50
		(2nd half)
136	130	140
141	140	150
1209k/t	1200k/t	1200k/t

Growth	Dfference
③－①	③－②
+294.4	+200.0
+22.6	+20.0
+9.7	+13.0
(2.7)	+10.0
0.0	0.0

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２－３．Full Year Performance

Sales and operating income both revised upward from the announcement at the beginning of the year

Aiming for record-high operating income of 200 billion yen

4,300.0 4,400.0

4,005.6

（¥bn）							4,100.0
		3,082.2 3,178.0			3,367.9
	2,933.1	3,107.0	2,918.6	Sales
2,822.8	2,814.5
				OP
								Previous
								Plan
							200.0	250.0
		173.1	166.3			177.4	180.0
134.5	143.5	150.5
	127.2
			122.2
			113.9

FY2014	FY2015	FY2016	FY2017	FY2018	FY2019	FY2020	FY2021	FY2022	FY2023	Mid-Plan
									Plan	25M

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(Automotive Segment record profit: 98.6 billion yen in FY2016)

２－４．Sales and Operating Income by Segment

Revised segment forecasts based on 1H results and current business environment.

The automotive segment aims to achieve a new record high and achieve the mid-term management plan of 25M ahead of schedule.

	FY2022	FY2023	FY2023	Growth	Difference
	Actual①	Previous Plan➁	Revised Plan③	③－①	③－②
bn	Sales	OP	Sales	OP	Sales	OP	Sales	OP	Sales	OP
Environment	928.2	37.9	960.0	38.0	970.0	40.0	+41.8	+2.1	+10.0	2.0
and Energy
Info-	250.3	21.9	230.0	6.0	220.0	1.0	(30.3)	(20.9)	(10.0)	(5.0)
communications
Automotive	2,186.8	55.7	2,300.0	85.0	2,500.0	110.0	+313.2	+54.3	+200.0	+25.0
Electronics	366.0	38.3	340.0	22.0	350.0	24.0	(16.0)	(14.3)	10.0	2.0
Industrial Materials	363.3	24.0	370.0	29.0	360.0	25.0	(3.3)	+1.0	(10.0)	(4.0)
and Others
Total	4,005.6	177.4	4,100.0	180.0	4,300.0	200.0	+294.4	+22.6	+200.0	20.0

※Differences between the aggregate of all segments and Total are consolidated eliminations.

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３－１．Environment and Energy

Business Environment

• Progress toward a decarbonized society continues. Energy infrastructure and investments related to renewable energy remain active, with continued strong demand for high-voltage power cables and transmission and distribution equipment

・Recovery in automobile production has led to an increase in demand for rectangular magnet wires for electric vehicles

Left:Sales Right:OP （¥bn）

Initiatives

• Expanding orders for power cables (interconnection cables, wind power generation, etc.), increasing production capacity, reducing costs, improving quality, developing new products, and strengthening project management
• Reducing costs and developing next-generation products for rectangular magnet wires used in electric vehicles.
• Creating further synergy with Nissin Electric

Topics

Redox flow batteries

New order received for Queensland, Australia and Kashiwazaki, Niigata

Contributing to the realization of a sustainable society through long-life and safe RF batteries

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