Yaskawa Earnings: Robotics Demand Showing Less Resiliency Amid Macroeconomic Headwinds

We think the declining robotics orders in key regions including Japan, the Americas, and other Asian markets suggest that electric vehicles and new infrastructure-related demand are not as resilient as we previously thought. August-quarter robotics orders declined 15% year on year, which was lower than the 10% decline in the May quarter. Consequently, we cut our fiscal 2023 (ending February 2024) robotics sales growth assumption to 0.5% year on year from 8% previously, despite reflecting the weaker yen. With a lower near-term outlook of its motion control segment as well, we project consolidated revenue to decline 2.5% year on year, down from 2% growth before. However, our operating income forecast for 2023 is unchanged, as the impact of the revenue cut is largely offset by the upward revision in motion control’s operating margin, which improved due to the passthrough of cost increases. As a result, with our midterm revenue growth expectations remaining largely unchanged, we maintain our fair value estimate at JPY 5,200. For 2024, we project a top-line recovery of 9% year on year, supported by stronger factory automation demand as semiconductor and electronics production picks up. We believe shares are fairly valued.

We also have a weaker near-term outlook for the motion control segment, and now project segment sales to decline 5.5% year on year, down from 0.5% growth previously. August-quarter motion control orders were lower than expected, with a 41% year-on-year decline, down from a 29% decline in the May quarter. The segment consists of servo motors and inverters, which are linked to demand for semiconductor production equipment, factory equipment like machine tools, and heating, ventilation, and air conditioning products. With expectations of limited recovery for manufacturing activity globally and much of the accumulated servo motor backlog to have been digested, we expect the segment will face a steeper top-line decline in the second half of fiscal 2023.