Yaskawa Earnings: Expect Robotics To Drive 2023 Sales Growth As Servo Motor Demand Weakens

Wide-moat Yaskawa Electric’s revenue growth of 22.0% year on year in the fourth quarter of fiscal 2022, ending February, was largely in line with expectations, driven by strong robot sales. Quarterly orders for the motion control segment, comprising AC servo motors and inverters, were down 28% year on year due to sluggish capital investments in the semiconductor industry as well as weak demand in China, which was exacerbated by the lockdown. Meanwhile, robotics orders were down by only 8% year on year, from solid demand outside China (which declined 32%), supported by EV/battery investments and factory automation needs in general industries. Looking to 2023, we expect these trends to continue, leading to further sales growth for industrial robots, while servo motor demand remains stagnant. With our outlook remaining intact, we maintain our fair value estimate at JPY 5,200, implying shares are fairly valued.