Omron shares experienced a significant decline in value after the Japanese electronics maker revised its fiscal-year earnings guidance. The company cited weaker investment activities in the areas of chips and electric vehicles, as well as China's economic slowdown as the reasons behind the downward adjustment.
As of Tuesday morning, shares were trading 15% lower at 5,551 yen. This indicates a clear reaction from the market to Omron's announcement.
Specifically, Omron stated that it expects its net profit for the year ending in March to experience a 98% drop, amounting to just Y1.50 billion ($10.1 million). This new projection is a significant decline from the previous estimate of Y18.0 billion in net profit.
Additionally, Omron has revised its forecast for fiscal-year revenue, expecting a decrease of 7.5% to Y810.00 billion. This is a revision from the earlier forecast of Y850.00 billion.
Omron's industrial automation business is currently affected by weak demand for semiconductor-related investment. Furthermore, the demand for capital investment for EVs and rechargeable batteries is expected to be lower than previously projected.
In addition to these internal factors, the current Chinese economic slowdown poses a further challenge. Omron acknowledges that this economic situation will negatively impact the demand for their product offerings, including general-purpose equipment and other products.
During the nine months ending on December 31, Omron's net profit experienced an 84% decline to Y7.85 billion, while revenue decreased by 4.7% to Y607.985 billion.
Despite these challenges, Omron remains committed to addressing the evolving market conditions and leveraging its strengths to overcome the obstacles.