Dentsu Soken (4812) Q2 2024 earnings summary

Executive summary

• Net sales for 2Q FY2024 reached ¥74.2 billion, up 6.3% year-over-year, driven by growth in Financial and Manufacturing Solutions segments and nearly matching the plan.

• Operating profit was ¥10.36 billion, down 2.7% YoY and 5.8% below the initial forecast, mainly due to increased personnel and SG&A expenses.

• Orders received rose 15.9% YoY, with order backlog up 8.5% YoY at the end of 2Q.

• Net profit attributable to owners of parent decreased 2.7% YoY to ¥7.25 billion.

• The company completed the acquisition of Mitsue-Links Co., Ltd., contributing to increased goodwill and segment growth.

Financial highlights

• Gross profit for 2Q FY2024 was ¥27.08 billion, up 5.9% YoY, but slightly below plan.

• Operating margin declined to 14.0% from 15.3% YoY.

• EPS for the second quarter was ¥111.38, down from ¥114.44 in the prior year.

• Total assets grew to ¥143,597 million as of June 30, 2024, up from ¥133,333 million at year-end 2023.

• Net assets increased to ¥86,944 million, with an equity ratio of 60.5%.

Outlook and guidance

• Full-year net sales forecast is ¥155 billion (+8.7% YoY), with operating profit forecast at ¥22.5 billion (+7.0% YoY).

• Net profit forecast for FY2024 is ¥15.7 billion, with EPS projected at ¥241.28.

• Second half of FY2024 expected to see stronger profit growth, with operating profit up 17.0% YoY.

• Orders received in 2Q and expected improvements in 2H support unchanged profit guidance.

• The impact of Mitsue-Links becoming a subsidiary is expected to be minimal on profits due to goodwill amortization.