MLCC manufacturer Murata Manufacturing Co., Ltd. stated that demand for components in smartphones is recovering, and there is also expected growth in demand related to automotive electrification. Therefore, Murata anticipates an increase in revenue and profit margin for the fiscal year 2024 (April 2024 to March 2025).
According to reports from Kyodo News and Nikkei, as well as information from Murata's official website, Murata's latest financial report showed a 2.8% decrease in revenue and a 27.8% decrease in profit for the fiscal year 2023.
For the fiscal year 2024, revenue is expected to increase by 3.6%, and profit is projected to increase by 39.2%. In the fiscal year 2023, despite increased demand in the automotive and smartphone sectors, a decline in demand for products such as power tools, PCs, and industrial machinery led to a decrease in annual revenue.
The decrease in operating profit was due to factors such as low utilization rates of production lines, price reductions for products, and impairment losses related to cylindrical lithium-ion secondary battery equipment, amounting to a loss of JPY49.5 billion (US$318.63 million). The cylindrical lithium-ion battery business was acquired by Murata from Sony for JPY17.5 billion in 2017.
Murata invested in expansion at its factory in Koriyama City, Fukushima Prefecture, Japan, to meet the demand generated by the stay-at-home economy during the pandemic. However, after the boom subsided, there was a downturn, particularly in the sales of batteries for power tools, which had previously shown high growth rates, leading to equipment impairment. The cylindrical lithium-ion secondary battery business aims to reduce production costs and continue operations.
Murata's main product is MLCC and other components used in smartphones, thus the performance of the smartphone market significantly impacts Murata. The company estimates that smartphone demand will increase from 1.14 billion units in fiscal year 2023 to 1.18 billion units in fiscal year 2024, representing a 3% annual increase.
During an online financial results briefing, Murata's Chairman, Tsuneo Murata, stated that shipments of smartphone components, which had previously stagnated in China, are recovering, with an increase in demand for components for low-end and specific high-end models.
This has also improved the utilization rate of MLCC factories. The utilization rate, originally 80-85% in the fiscal year 2023, is expected to increase to around 85-90% in fiscal year 2024. It is estimated that increasing the utilization rate will result in an additional operating profit of JPY156 billion.
In addition to smartphones, the automotive component business also contributes to Murata's performance. Demand for MLCCs used in electric vehicles (EVs) is increasing, and there is also rising demand for fuel-efficient gasoline vehicles, such as hybrid electric vehicles (HEVs), for safety driving assistance functions.
Murata's sales of automotive components for the fiscal year 2024 are expected to increase by 10.1%. This is the highest growth rate among Murata's five business segments (automotive, communication, computing, home appliances, industrial, and others) for the fiscal year 2024, and the revenue share is also expected to increase from 26% in the fiscal year 2023 to 28%.
Furthermore, reducing inventory levels also contributes to profit recovery. Murata utilizes its connections with major smartphone manufacturers to adjust utilization rates flexibly, resulting in a reduction of approximately 10% in inventory assets for the fiscal year 2023 compared to the same period in the fiscal year 2022.
