Yaskawa Earnings: Weak Servo Motor Capacity Utilization Dampens Margins, but Worst Is Over

Although Yaskawa’s 7% year-on-year revenue decline in the May quarter was in line with expectations, its operating margin of 8.4%, down from 11.5% in the previous year, was a negative surprise, impacted by lower capacity utilization of servo motors in the motion control segment and low-margin deals from the robotics segment. We now forecast a slower utilization recovery of servo motors and cut our operating income estimate for fiscal 2024 ending February 2025 by 7.5% to JPY 64 billion. Nevertheless, we expect sales/production of motion control components and robots to pick up in the August quarter. We maintain our fair value estimate of Yaskawa at JPY 5,600 as our medium-term outlook remains intact, and we believe its shares are fairly valued.