NOK reports lower operating income amid weaker sales

Japanese sealing products and electronics components supplier NOK Corp. has posted lower operating income for the fiscal year ended 31 March, citing weaker sales and higher costs despite stronger foreign exchange gains. Net sales for the year fell 3.7% year-on-year to Yen738.4 billion (€4 billion), while operating income declined 11.5% to Yen33.0 billion. Ordinary income rose 3.7% to Yen49.8 billion, and profit attributable to owners of the parent surged 52.8% to Yen46.3 billion. NOK attributed the operating income drop to lower net sales, while ordinary income benefited from higher foreign exchange gains. Within the group’s seal business, net sales increased 1.3% to Yen367.4 billion and operating income rose 6.3% to Yen27.9 billion. Despite a decline in Japanese car production, sales grew due to expanded sales to non-Japanese customers in China and a recovery in Thailand’s automotive market. Industrial machinery sales also rose, particularly for construction machinery in China, supported by favorable foreign exchange rates. Operating income in the seal business improved despite higher fixed costs, thanks to price revisions and lower raw material prices. In contrast, the electronic products business saw net sales fall 7.0% to Yen345.1 billion, with operating income plummeting 55.6% to Yen4.0 billion. NOK blamed weaker foreign exchange rates, lower component costs, and reduced sales volumes. Automotive-related sales in this segment declined as growth in battery applications slowed. Other businesses reported net sales down 21.8% to Yen25.9 billion and operating income down 46.4% to Yen1.1 billion. NOK also noted the completion of share transfers in its roll products business. For the next fiscal year, the company forecasts net sales of Yen756.6 billion (up 2.5%) and operating income of Yen35.0 billion (up 6.1%). The seal business is expected to reach net sales of Yen393.4 billion and operating income of Yen30.8 billion, driven by exchange rate effects, product transfers, and increased sales in China. Electronic products sales are projected to rise to Yen356.8 billion, supported by stronger smartphone and hard disc drive demand, though automotive-related sales are expected to remain flat. NOK warned that geopolitical tensions in the Middle East could impact its business but assumes it can absorb the potential effects. The company will continue monitoring developments and adjust its outlook as needed.