3701/40 177896-05 Japan’s Fanuc announced on July 29 that it expects its consolidated net profit for the fiscal year 2024 (ending March 2025) to fall 6% from the previous quarter to 125.3 billion yen, but it is 18 billion yen higher than the previous forecast. The economic slowdown has led to a recovery in orders from China, where demand has been sluggish. Fanuc also revised its full-year forecast to a weaker yen, which also contributed to the upside.

Operating income is expected to decrease by 1% to 784.3 billion yen, operating profit is expected to increase by 1% to 143 billion yen, operating income is expected to increase by 37.9 billion yen and operating profit is expected to increase by 22 billion yen. Since July, the exchange rate has maintained the premise of 145 yen per dollar. The annual forecast for the exchange rate is 147.72 dollars per dollar, which is revised down to 13 yen weaker than the initial forecast of 135 yen per dollar.

The increase was due to a recovery in orders from China. Certain products serve as leadi3701/40 177896-05 ng indicators of performance half a year later, with orders rising 12 per cent year on year to Y199.9bn in the April-June period. By region, China, which accounts for a quarter of orders, grew by 36 percent, a larger increase.

Demand related to factory automation, such as numerical control (NC) devices, which are the brains of machine tools, is picking up. Chinese government subsidies have had a positive effect on machine tool orders, and Fanuc’s factory automation division has also seen a boost, according to the Japan Working Machinery Industry Association. Robodrill, a metalworking tool used to make smart phone cases, is also growing.

At the earnings briefing on July 29, President Kenji Yamaguchi explained the reason for the upward revision of the full-year earnings forecast, saying that the factory automation division remained strong, and the Robo machine division (including Robodrill) also improved significantly.

On the other hand, the demand for robots for automotive assembly and welding has stagnated due to the slowdown in investment in pure electric vehicles (EVs). The order volume of the robot department from April to June fell by 4% year-on-year, the only negative growth among all departments.

“Investment in pure electric vehicles is being delayed,” Yamaguchi said. There is investme3701/40 177896-05 nt in hybrid vehicles, but the timing of investment is temporarily delayed.

Fanuc has been considering the expansion of automation demand due to labor shortages, and has been building new factories as an option to increase robot production capacity. However, in view of the current stagnant demand, Yamaguchi said, We will not build new facilities for several years.

According to the consolidated financial report for April to June 2024 released on the same day, Fanuc’s operating income decreased by 3% to 195.1 billion yen, and net profit decreased by 5% to 28.8 billion yen. China’s previously strong investment in pure electric vehicles has slowed, leading to a decline in sales in the robotics division. From the factory automation segment, sales in China increased significantly, while sluggish domestic demand in Europe and Japan led to a decline in overall sales. In China and the United States, although the CNC machine tool segment performed strongly, it failed to compensate for the decline in the robotics segment and factory automation segment.