Renesas Electronics Corp

Thank you very much for taking time out of your busy schedule today to attend the Earnings School for Renaissance Electronics fourth quarter and full year of FY24. Simultaneous interpretation is available for today's presentation. Please click on the interpretation icon at the bottom of the screen and select your language. Speakers, please turn on the camera. Speakers today are Hidetoshi Shibata, President and CEO, and Shuhei Shinkai, Senior Vice President and CFO. Staff members are also present. After a brief remark from Mr. Shibata, Mr. Shinkai will explain the financial results for the fourth quarter and the whole year, which will be followed by question and answer session. The entire presentation is scheduled to last 60 minutes. The presentation material is uploaded on the IR section of the company's website. Now, please unmute Mr. Shibata and kick off the presentation. Good morning, ladies and gentlemen. This is Shibata. In the previous earnings call, I said that we are going to take a deep breath. And we actually did. Also, the state of the business is now somewhat stabilizing. Looking at Q4, due to the expectation, we were able to reduce the channel inventory. And I know that you're interested about the outlook for this fiscal year. For Q1, we have given the guidance.

We expect slight growth.

Also, there are some moving factors, but generally speaking, I think we are hitting the bottom. And now the question is how quickly we can go back to the growth trajectory. On that point, there are still uncertainties, but gradually we expect the outlook to improve. So that's our expectation going forward. And I think I will also explain later. From this fiscal year, the Altium's revenue recognition standard has been changed. So at first glance, the ultimate revenue looks like it's going to decline significantly. And that is impacting the overall revenue trend. And the other players in the industry has done this. So it's not abnormal. But given the acquisition, we decided to change the standard at this point. Last year, we have started the dividend, and we are going to be paying the dividend for this fiscal year as well. So that's a summary for the outlook. Now I will hand over to Mr. Shinkai, who will give you a more detailed explanation about the results and the outlook. This is Shinkai, the CFO. So regarding the result, I will explain using the presentation material uploaded on the IR site. Next page, please. This is a disclaimer. So at the very bottom, you can see that the figures reflect the impact of PPA for transfer of an Altium for which the deals were completed on June 20th and August 1st of 2024, respectively. The second and the third quarters of the 524 have also been updated retrospectively. Next page, please. So this is the results from Q4. For Q4, you can see the column in the middle, the dark blue column. For revenue, it was $292.6 billion. The gross margin stood at 54.9%. Operating profit was $75.4 billion and operating margin was 25.8%. Net profit was $71.9 billion with EBITDA of $98.2 billion yen. FX is 149 to the dollar and 162 yen against the euro. Three columns to the right is the change from the forecast. And the four-year actual is shown by the dark blue column on the right. The revenue was 1,348.5 million yen with a gross margin of 56.1%. Our trading profit was 397.9 billion, and the operating margin was 29.5%. Net profit was 360.4 billion, with EBITDA of 486.2 billion yen. For the full year, looking at the change from last fiscal year, revenue was down by 8.2%. Automotive grew modestly year on year, and for industrial infrastructure IoT, because of the weak market, the revenue came down. And excluding the impact of the weaker yen by 11 yen, the revenue declined by 11.7%. Gross margin compared to last fiscal year was down by 0.9 percentage points. For IIoT, the product mix deteriorated, and also the lower utilization had a negative impact, but it was offset by the improvement in the production cost. For operating margin, It came down by 4.6 percentage points year-on-year. This is mainly due to the increase in OPEX, mainly for R&D, and also some impact from the acquisition cost. Next page, please.