Murata Manufacturing : Earnings call transcript for FY2023 (Presentation/Q&A session)

Murata Manufacturing Co., Ltd.

Financial Results Briefing for the Fiscal Year Ended March 2024

April 26, 2024

Event Summary

[Company Name]	Murata Manufacturing Co., Ltd.
[Company ID]	6981‐QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	Financial Results Briefing for the Fiscal Year Ended March 2024
[Fiscal Period]	FY2024 Q4
[Date]	April 26, 2024
[Time]	15:30 - 16:35
	(Total: 65 minutes, Presentation: 32 minutes, Q&A: 33 minutes)
[Venue]	Webcast
[Number of Speakers]	3
	Norio Nakajima	President, Representative Director
	Masanori Minamide	Executive Vice President (Board Member),
		General Manager, Corporate Unit
	Nagato Omori	Executive Vice President, General Manager,
		Ceramic Capacitor Business Unit
[Analyst Names]*	Daiki Takayama	Goldman Sachs
	Shoji Sato	Morgan Stanley MUFG Securities
	Manabu Akizuki	Nomura Securities
	Shingo Hirata	UBS Securities

p. 1

Presentation

Moderator: Now it's time to begin the Financial Results Briefing for the Fiscal Year Ended March 2024 of Murata Manufacturing Co., Ltd. Thank you very much for taking time out of your very busy schedules to join us today.

Let me begin by introducing today's attendees. Nakajima Norio, President, Representative Director.

Nakajima: Thank you.

Moderator: Masanori Minamide, Executive Vice President (Board Member), General Manager, Corporate Unit.

Minamide: Thank you.

Moderator: Nagato Omori, Executive Vice President, General Manager, Ceramic Capacitor Business Unit.

Omori: Thank you.

Moderator: Today we will begin with an explanation of our financial results, followed by a question‐and‐ answer session at about 4:00 PM.

The presentation materials are available on our website and in the IR Library of Investor Relations. They are also available on the Timely Disclosure Information Viewing Service. The financial results presentation will be explained as I mention the number of pages, so please refer to it if you are joining us by phone.

Mr. Minamide will now explain the details of the financial results.

p. 2

Minamide: Thank you very much for your continued support of our IR activities. I will now explain the financial results.

See page two. This is the topic of this earnings presentation. First of all, the results for FY2023 show a 2.8% decrease in revenue from the previous year to JPY1,640.2 billion, which is approximately JPY20.2 billion higher than the latest forecast. This will be explained later.

Operating profit was JPY215.4 billion, down 27.8% from the previous year, and this time an impairment loss of JPY49.5 billion was recorded for manufacturing machineries, etc. for cylindrical type lithium‐ion secondary batteries. I will explain this again later.

Revenue increased, but manufacturing volume decreased compared to the latest forecast, and this is the reason for the downward swing.

With regard to shareholder returns, the Company has announced a dividend increase of JPY2 per share over the previous forecast.

p. 3

See page three. For FY2024, we are projecting a 3.6% YoY increase in revenue to JPY1,700 billion, and a 39.2% YoY increase in operating profit to JPY300 billion. I will explain the details later.

Capital expenditures are planned at JPY190 billion, a decrease of JPY29.5 billion from the previous year.

Regarding shareholder returns, we plan to increase the dividend from the previous fiscal year to JPY54 per share. Today, the Company announced a plan to repurchase up to JPY80 billion of its own shares as an additional shareholder return measure.

p. 4

See page five. I will now explain the details. First of all, in terms of the overview of our business performance for FY2023, revenue increased in the mobility and smartphone sectors, but decreased in the power tools, PC, and industrial equipment sectors. As for operating profit, as I mentioned earlier, we recorded an impairment loss of JPY49.5 billion for manufacturing machineries, etc. for cylindrical type lithium‐ion secondary batteries. President Nakajima will later explain the future business direction at the end of his presentation of the financial results. ROIC was 10% for this fiscal year.

At the previous financial results briefing, we announced that the impact of the earthquake was a factor in reducing profits by JPY3 billion to JPY5 billion, but as a result, the impact was limited to a few hundred million yen, partly because a large number of facilities and equipment were repaired and are now in use, and alternative production is being carried out. This includes insurance income.

p. 5

See page six. This is about the impairment loss in the lithium‐ion battery business. Although we have made large capital investments in response to the rapid expansion of the market over the past several years, inventory adjustments took longer than expected due to the large drop‐off from the increase in demand for the COVID‐19 pandemic. In this situation, as a result of estimating the recoverable amount based on IFRS standards, an impairment loss of JPY49.5 billion was recorded, which is the full amount of connection with the relevant manufacturing machineries, etc.

p. 6

See page seven. This is the quarterly performance trend. I will spare you the details.

p. 7

See page eight. These are revenue, orders, and backlogs. Although orders received decreased slightly compared to the previous quarter, the BB ratio exceeded revenue for the first time in a long time, totaling 1.05 times the quarterly revenue.

This includes the revaluation of order backlogs due to exchange rate fluctuations, but even excluding this, the figure still exceeds 1. For your information, the BB ratio for capacitors is 1.06.

p. 8

See page nine. In terms of segment revenue by business, as you can see, capacitors and inductors are positive, while others are negative. I will explain in detail on the next page.

p. 9