Renesas Electronics Corporation

Renesas reported Q2 revenue of JPY 45.3 billion, gross margin of 58.1%, operating profit of JPY 132.7 billion, operating margin of 32.7%, EBITDA of JPY 154.3 billion, and profit attributable to owners of parent of JPY 113.3 billion. On a year-on-year basis, revenue was up 24.8%, and on a quarter-on-quarter basis revenue increased 8.8%; the company also said Q2 revenue was 4.5% above the forecast median and operating margin was 3.7 points above the forecast median. For Q3, management guided to revenue of JPY 430 billion, gross margin of 57.5%, and operating margin of 32.5%, assuming JPY 159 to the dollar and JPY 184 to the euro. They said Q3 revenue should rise year on year by 28.7% and quarter on quarter by 6.1%, with auto, industrial infrastructure, and IoT expected to grow.

CEO Hidetoshi Shibata struck a constructive tone, saying automotive and IoT were both stronger than expected in Q2 and that demand from data center and AI-related customers should remain very strong. He emphasized that the earthquake’s business impact appears limited, with damage and shutdowns contained and production recovery progressing quickly. He also reiterated the medium-term focus on execution, supply-chain recovery, and continued investment in growth areas while maintaining employment at Takasaki.

CFO Shuhei Shinkai focused on the upside versus plan and the drivers behind it. He said Q2 revenue beat the forecast by 4.5%, gross margin improved by 1.1 points from the forecast due to yen depreciation, mix, and other factors, and operating margin exceeded plan by 3.7 points, helped by gross profit improvement and more than JPY 7 billion of lower OpEx. He also flagged Q3 gross margin pressure from rising manufacturing costs, while noting utilization should improve slightly and that some expenses postponed from Q2 will shift into Q3; he added that from July 1 the company revised prices on some products, with the effect to show in the second half.

Analysts pressed management on the earthquake impact, with Renesas saying the immediate business effect is smaller than after the earthquake 10 years ago and that prior countermeasures like anti-seismic equipment placement and BCP inventory helped restart operations faster. Questions on data center ASICs focused on whether supply remains a bottleneck; management said demand is still very tight, supply is being increased gradually, and step-function capacity additions are being worked on for later in the year and next year. On Takasaki, management explained the 6-inch line is becoming increasingly difficult to maintain because the industry is shrinking and parts/support are harder to secure, but said employment will be maintained and R&D resources will be reinforced.