SCREEN Holdings Co ((JP:7735)) has held its Q1 earnings call. Read on for the main highlights of the call.
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SCREEN Holdings Co. recently held its earnings call, revealing a mixed sentiment among stakeholders. While the company reported growth in net sales and significant improvements in its FT segment, challenges were evident in the form of declines in operating income, SPE segment performance, and cash flow. These mixed results highlight the company’s ongoing struggle to maintain profitability and manage cash effectively.
Net Sales Growth
SCREEN Holdings reported net sales of JPY135.7 billion for Q1, marking a 1.2% increase year-over-year. This growth, albeit modest, indicates a positive trend in the company’s revenue generation capabilities.
FT Segment Performance
The FT segment showed a remarkable performance with a significant increase in both sales and income compared to the previous year. Net sales in this segment rose by JPY4.7 billion, while operating income increased by JPY1.3 billion, underscoring the segment’s contribution to the company’s overall performance.
Equity Ratio Improvement
The company’s balance sheet compression led to an improved equity ratio of 64.5%. This improvement reflects a stronger financial position and a more robust capital structure.
OLED and Equipment Sales Surge
A significant surge in sales of OLED and other equipment bolstered the FT segment’s positive performance, highlighting the growing demand and successful market penetration of these products.
R&D and Capital Investment
SCREEN Holdings continued its commitment to innovation with substantial investments in R&D and capital expenditures. The company spent JPY8.5 billion on R&D, JPY4.4 billion on capital investment, and JPY3.4 billion on depreciation and amortization in Q1, indicating a focus on long-term growth.
Decrease in Operating Income
Despite the sales growth, operating income decreased by JPY3.3 billion year-over-year, with an operating margin of 18%, down 2.7% from the previous year. This decline points to challenges in cost management and profitability.
SPE Segment Decline
The SPE segment faced a downturn with both sales and profits declining year-over-year. Sales decreased by JPY2.6 billion, and operating income fell by JPY3.3 billion, highlighting the segment’s struggle to maintain its previous performance levels.
Cash Flow Challenges
Operating cash flow in Q1 was limited to JPY6.9 billion due to large income tax payments, resulting in a negative free cash flow of JPY2.7 billion. This indicates ongoing challenges in cash management.
PE Segment Struggles
The PE segment also faced difficulties, with a decrease in sales and profit. Net sales were down by JPY0.8 billion year-over-year, and operating income decreased by JPY0.5 billion, reflecting the segment’s ongoing challenges.
Forward-Looking Guidance
SCREEN Holdings provided detailed guidance for the fiscal year ending March 2026, maintaining its full-year forecast with expected net sales of JPY621 billion and an operating income of JPY117 billion. The company expressed optimism for future growth, particularly in AI and advanced packaging markets, while acknowledging challenges from market uncertainties and geopolitical factors. Regional sales contributions were highlighted, with China and Taiwan being significant markets.
In conclusion, SCREEN Holdings’ earnings call presented a mixed picture of growth and challenges. While the company saw improvements in certain segments and maintained a positive outlook for future growth, it also faced significant hurdles in profitability and cash flow management. Stakeholders will be keenly watching how the company navigates these challenges in the coming quarters.