Sumitomo Electric Industries (5802): Briefing: Infocommunications business stronger than expected

研报英文原文证据摘录

Sumitomo Electric Industries (5802): Briefing: Infocommunications business stronger than expected

Impact of Middle East developments

• Continued geopolitical tensions in the Middle East pose various risks, including

higher raw material and energy prices and supply chain disruptions.

• Given rapidly changing conditions, it is difficult to reasonably estimate full-year

impacts, and downside risks related to heightened Middle East tensions are not

incorporated into the current earnings forecast.

• Should such risks materialize, the company aims to maximize recovery through

catch-up production, price pass-through, and cost reduction initiatives.

Drivers of changes in operating profit

• Excluding Sumitomo Densetsu’s FY3/26 operating profit of ¥25.6bn, underlying

operating profit stood at ¥392.6bn.

• Despite profit headwinds such as annual price reductions and higher copper and

materials costs, the company expects volume growth—particularly in

Infocommunications—to lift FY3/27 operating profit to ¥425.0bn.

Segment earnings outlook

Environment & Energy

OP is expected to decline, reflecting the deconsolidation of Sumitomo Densetsu, a

reversal of favorable copper reversion effects seen in FY3/26, higher start-up costs for a

new European power cable base, and increases in labor and R&D expenses.

Infocommunications

Driven by the gen AI expansion, demand for data center–oriented optical wiring products

and optical devices is likely to rise further, resulting in substantial sales & profit growth.

Automotive

Global demand for wiring harnesses and anti-vibration rubber products is expected to

increase, leading to higher sales and operating profit.

Electronics

Operating profit is expected to decline due to weaker demand for FPCs from major

customers and higher labor costs.