Japan Markets ViewMurata’s (6981) Financial Results Briefing Reveals “End of Smartphone and PC Inventory Adjustments”

 

[QUICK Market Eyes] Murata Manufacturing (6981, Murata), the world’s top manufacturer of multilayer ceramic capacitors, saw its share price rise by 4% on the Tokyo Stock Exchange on August 1, reaching its year high for the first time in almost a month and a half.

 

After the close of trading on July 31, the company announced that its consolidated operating income (under the International Financial Reporting Standards) for the April-June 2023 period (Q1) fell by 45% YoY to JPY50.1 bn. This was 40% larger than the operating income of JPY35.3 bn, an estimate of QUICK Consensus, which is the average of analyst forecasts (of nine companies as of July 26).

 

Sales revenue, which corresponds to net sales, increased by 16% to JPY367.7 bn. Meanwhile, sales of communication modules for smartphones fell, and sales of capacitors for base stations and PCs were sluggish.

 

However, sales and earnings increased compared to the January-March period, partly due to the weaker yen. Specifically, sales of capacitors and surface wave filters for smartphones grew. In addition, sales of communication modules for PCs increased.

 

It became clear that “smartphones” and “artificial intelligence (AI)” were the focus of the financial results briefing held on the same day.

 

QUICK, in collaboration with SCRIPTS Asia, provides transcripts of investor briefings and other events held by listed companies in Japan and Asia. We conducted text mining using these transcripts.

 

Text Mining of Murata’s Financial Results Briefing

 

Masanori Minamide, Executive Vice President, Director of Corporate Unit, touched on the difference in the business environment from April at the briefing. According to Mr. Minamide, despite the expected recovery in the smartphone market around summer, the current deterioration in business confidence will slow the pace of recovery in components demand through the second half of the fiscal year.

 

At the same time, Mr. Minamide noted that the smartphone market in Greater China saw the inventory adjustments of components largely resolved in the April-June 2023 period, though final demand is not so strong yet. Moreover, regarding the North American smartphone market for Apple Inc., etc., he said that sales are likely to increase as planned from the July-September period onward, as is currently the case in most years.

 

Questions from analysts included the ones about “AI.” In response to a question about how AI, including generative AI represented by Chat GPT, would affect the electronic components business, such as multilayer ceramic capacitors, Murata replied, “The impact is not so significant at this point.” However, for the mid-to-long term, the company unveiled its plans to make regular investments in production because servers for AI will be equipped with more graphics processing units (GPUs) requiring large-capacity capacitors, which are difficult to produce.

 

Nomura Securities analyst Manabu Akizuki, in his report on Murata’s financial results, indicated his view that the product mix would improve. As a basis for this view, he cited the end of inventory adjustments in component for PCs and smartphones in the April-June 2023 period and expected growth in shipments for automotive, high-power servers, and high-end smartphones in the fiscal year ending March 2024. Additionally, he emphasized his “buy” investment judgment again, saying that the company’s plan is too conservative.

 

(Reported on August 2, partially revised)

 

 

Transcripts of SCRIPTS Asia on QUICK Data Factory
https://corporate.quick.co.jp/data-factory/en/product/data005/

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