Daifuku Earnings: Continued Headwinds but Midterm Outlook Intact

Daifuku’s June-quarter operating income disappointed due to a negative mix from a less profitable cleanroom project as well as a delay in a relatively profitable one. However, the company confirmed that the former was from an older order, and expects the latter to complete in the September quarter. As such, this is mainly a timing issue and we expect limited impact in full-year earnings. The weak demand for its cleanroom business, in which June-quarter orders fell 60.5% year on year, was expected given ongoing cyclical downturn for the chip industry and the high base effect. This is in line with our assumed 5.5% full-year drop in cleanroom sales for 2023.