Hitachi Ltd ((HTHIY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Hitachi Ltd revealed a generally optimistic sentiment, underscoring strong revenue growth and upward forecast revisions. The company has shown remarkable success particularly in its Digital Systems & Services and Hitachi Energy sectors. However, challenges persist, notably in the Chinese market and specific segments like Railway Systems and semiconductor-related businesses. Despite these hurdles, the overall mood remains positive, driven by robust performance and strategic adjustments.
Revenue and Profit Growth
The third quarter revenues for Hitachi Ltd stood at JPY 2.189 trillion, marking an impressive 11% increase year-on-year. The adjusted EBITA also rose significantly to JPY 221.8 billion, reflecting a JPY 34.1 billion increase year-on-year. For the period from Q1 to Q3, revenues amounted to JPY 6.0537 trillion, a 12% rise from the previous year, with adjusted EBITA showing an increase of JPY 83.4 billion to JPY 581.5 billion.
Upward Forecast Revisions
Hitachi Ltd has revised its full-year forecast, with revenues expected to reach JPY 8.2856 trillion, a 4% increase from prior estimates. Adjusted EBITA projections have also been raised to JPY 829.3 billion, up by JPY 11.3 billion from previous forecasts, indicating a stronger-than-expected financial outlook.
Strong Performance of Hitachi Energy
Hitachi Energy has shown tremendous growth, securing orders worth JPY 2.6209 trillion in the first three quarters, up 51% year-on-year. With a backlog of JPY 4.3 trillion, the company is well-positioned for sustained business over the next two years.
Digital Systems & Services Success
The Digital Systems & Services division reported a 9% increase in revenues year-on-year, with an adjusted EBITA rise of JPY 16.1 billion, achieving a record high of JPY 87 billion. This sector continues to be a key driver for Hitachi’s growth.
GlobalLogic Continues to Grow
GlobalLogic, a part of the Digital Systems & Services sector, reported strong revenue and profit growth, contributing significantly to Hitachi’s overall performance and reinforcing its position in the digital transformation space.
Challenges in the Chinese Market
Hitachi faces hurdles in the Chinese market, particularly in the Digital Systems & Services sector, due to local government policies favoring domestic products. This has led to a decline in revenues from the region.
Railway Systems Profit Decline
Despite an increase in revenues for the Railway Systems segment, profits declined in the third quarter. This drop is attributed to specific challenges that arose during the quarter, impacting overall profitability.
Semiconductor Equipment Delays
The Measurement & Analysis Systems segment experienced a decline in adjusted EBITA by JPY 6.5 billion, primarily due to delays in the semiconductor cycle recovery. Improvement is now anticipated in the latter half of next year.
Forward-Looking Guidance
Hitachi Ltd has projected an optimistic outlook for the future. The company expects revenues to grow to JPY 8.2856 trillion for the full year, a 4% rise from earlier predictions. Adjusted EBITA is forecasted to reach JPY 829.3 billion, with net income likely increasing by JPY 10 billion to JPY 530 million. Noteworthy business successes include contracts with TenneT and Trenitalia, alongside a 9% rise in Digital Systems & Services orders and a substantial 51% boost in Hitachi Energy orders. Core free cash flow is projected to increase by JPY 100 billion, reaching JPY 440 billion.
In conclusion, Hitachi Ltd’s earnings call reflects a robust financial performance with optimistic future prospects, despite facing certain challenges. The company’s strategic focus on digital transformation and energy solutions seems to be paying off, as evidenced by strong growth in these areas. Investors can look forward to continued success as Hitachi navigates both opportunities and obstacles in the global market.
