Orders for mergers as a whole are also weak. From October to December 2023, it was 165.5 billion yen, down 17% from the same period last year. They were below year-ago levels in all regions of the world. The decline was most pronounced in China, where it fell 36 per cent. The decline was 12% in the Americas and 11% in Europe.
Fanuc used to have operating margins of more than 40 percent and was known for its highly profitable system. But the operating margin for the current fiscal year fell to 17 percent, about 5 percentage points worse than the previous fiscal year. Orders in the factory automation sector, which is the main business, continue to be depressed, centered on China...
Fanuc's recovery has been slow. On January 26, Fanuc announced that its consolidated net profit for fiscal year 2023 (ending March 2024) is expected to decrease by 28% year-on-year. The factory automation (FA) sector, which is the main business, continued to experience a downturn in orders centered on China. Because of the strong fear of recession in China, it is difficult to predict when the bottom will hit.
"From the perspective of factory automation, the destocking of the Chinese market has ended to a certain extent, and orders are gradually being received." However, on a consolidated basis for January-March 2024, orders are likely to remain flat compared to the previous quarter." Fanuc President Kenji Yamaguchi said at the same day's earnings briefing.
On January 26, Fanuc raised its guidance for fiscal 2023. Consolidated net profit fell 28 per cent from a year earlier to Y122.6bn, Y9bn higher than expected. Sales are expected to fall 9 percent to 771.5 billion yen, while operating profit is expected to fall 31 percent to 132.2 billion yen. Increases of 13.5 billion yen and 10.3 billion yen, respectively.
But it is hard to see signs of recovery. The increase in the full-year forecast is due to the previously accumulated backlog of orders in the robotics division being gradually digested. From 2022 to 2023, orders will increase due to increased production capacity of pure electric vehicles (EVs) centered in Europe and the United States. Sales increased compared to the company's expectations for October 2023.
The factory automation sector, the main business, continues to struggle. The factory automation sector's orders from October to December 2023 decreased by 7% year-on-year, showing a slow recovery. China-focused digital control (NC) devices, which are the brains of machine tools, did not perform well.
Orders for mergers as a whole are also weak. From October to December 2023, it was 165.5 billion yen, down 17% from the same period last year. They were below year-ago levels in all regions of the world. The decline was most pronounced in China, where it fell 36 per cent. The decline was 12% in the Americas and 11% in Europe.
Data from China's National Bureau of Statistics showed that the manufacturing purchasing managers' index (PMI) in December 2023 was below the 50-point line of expansion and contraction for three consecutive months. Consumption of products such as cars and smartphones is slowing as a result of a prolonged housing slump. Therefore, the demand for equipment investment is sluggish, and the destocking of machine tool enterprises is still continuing.
Fanuc's robotics division, which is expected to be an upside factor for the full year, is also facing difficulties. From October to December 2023, the order volume of the robot sector decreased by 30% compared with the same period last year. In Europe and the United States, there are signs of a pause in investment in pure electric vehicles. Destocking in the robotics division is slower than in the factory automation division, with President Yamaguchi pointing out that "it takes more than six months for inventory to fall to a reasonable level." The Robo machine segment, which includes metal processing high-speed drill machines used to make mobile phone cases, also decreased by 14 percent.
Fanuc used to have operating margins of more than 40 percent and was known for its highly profitable system. But the current impact is clear. The operating margin for the current fiscal year fell to 17 percent, about 5 percentage points worse than the previous fiscal year. The stall in the factory automation sector is having a negative impact. While Fanuc does not disclose the profits of its various divisions, the factory automation division is said to have relatively high margins. Because there is no solution in the short term, it needs to be patient for a while.
The consolidated financial report for April to December 2023, announced on the same day, showed that sales decreased by 6% year-on-year to 596.5 billion yen, and net profit decreased by 24% to 98.3 billion yen. China maintains destocking of factory automation products, which has a negative impact. In terms of sales by region from October to December 2023, China saw the largest decline, decreasing by 41 percent.
