SCSK (9719) Q1 2025 earnings summary

Executive summary

• Net sales rose 8.1% year-over-year to ¥122.5 billion, driven by robust IT investment demand and strong performance in system maintenance, operations, and network equipment sales to the communications sector.

• Operating profit was nearly flat at ¥12.9 billion, with a slight margin decline to 10.5%, impacted by higher personnel and recruitment costs and the absence of prior special demand.

• Profit attributable to owners increased 2.4% to ¥9.2 billion, reflecting the absence of prior valuation losses on marketable securities.

• Comprehensive income rose 9.5% year-over-year to ¥10,608 million.

• Incoming orders surged 12.4% and backlog grew 4.6% year-over-year.

Financial highlights

• Gross profit increased to ¥31,336 million, with gross profit margin decreasing by 0.7 points to 25.6%.

• SG&A expenses increased 9.2% year-over-year, mainly due to higher personnel and operating costs.

• Basic and diluted EPS improved to ¥29.52 from ¥28.84 year-over-year.

• Total assets decreased 1.1% from March 31, 2024, to ¥466,372 million, while total equity remained stable at ¥302,966 million.

• Gains on sales of real estate contributed positively to other income.

Outlook and guidance

• Full-year forecasts remain unchanged: net sales of ¥510,000 million (+6.2%), operating profit of ¥62,000 million (+8.8%), profit attributable to owners of parent of ¥44,500 million (+10.0%), and EPS of ¥142.42.

• Industry-specific AI and low-code, cloud-native platforms are being emphasized for future growth.

• Business Process Modernization initiatives are being accelerated, with a new office established in August 2024.

• Management expects continued IT investment demand, especially in cloud migration and digitalization, but notes risks from global economic uncertainties.