Sumitomo Electric Q1 FY2027: Operating Profit Soars 61%, Forecast Raised

Sumitomo Electric’s consolidated results for the first quarter of FY2027 (April–June 2026) showed record growth across all profit levels. Revenue increased 15.9% year on year to ¥1,330,591 million, operating profit jumped 61.0% to ¥97,059 million, recurring profit rose 66.6% to ¥103,039 million, and net income attributable to shareholders surged 89.1% to ¥66,414 million.

Buoyed by the strong start, the company raised its full-year forecasts: revenue to ¥5,400,000 million (up 5.7% from the previous year), operating profit to ¥450,000 million (up 7.6%), and net income to ¥340,000 million (down 8.0% due to the absence of large one-off gains booked a year earlier).

All five segments reported higher revenue or profit year on year, but profitability varied widely.

Information & Communications was the standout: sales surged 40.3% to ¥86,484 million, and operating profit soared 235.2% to ¥27,246 million on robust orders for optical wiring equipment and devices for AI data centers. The segment’s operating margin reached 31.5%, making it a high-profit engine.

Automotive, the largest segment with 58.7% of group sales, posted a 19.7% revenue gain to ¥802,803 million, driven by strong demand for wiring harnesses and anti-vibration rubber. However, operating profit dipped 2.1% to ¥26,026 million, squeezed by higher raw material and logistics costs, particularly from the Middle East and soaring copper prices. The margin was a thin 3.2%.

Electronics saw revenue rise 22.8% to ¥110,581 million and operating profit leap 86.4% to ¥11,720 million, as demand for flexible printed circuits held firm. The margin improved to 10.6%.

Industrial Materials & Others benefited from higher tungsten prices and strong demand for carbide products: revenue grew 24.6% to ¥115,743 million, and operating profit more than tripled, up 203.1% to ¥17,047 million, yielding a margin of 14.7%.

Environment & Energy was the only segment to see revenue decline, down 3.7% to ¥253,039 million, due to the deconsolidation of Sumitomo Densetsu. Yet operating profit rose 12.1% to ¥15,265 million, helped by higher copper prices, and the margin reached 6.0%.

Total assets at the end of the quarter stood at ¥5,143,492 million, an increase of ¥318,960 million from the previous fiscal year-end, driven by higher inventories, tangible fixed assets, and unrealized gains on securities. Liabilities grew ¥226,262 million to ¥2,215,795 million, mainly from short-term borrowings, pushing the equity ratio down to 55.1% from 56.9%.

Net assets expanded to ¥2,927,697 million despite dividend payments, owing to quarterly net income and rising other comprehensive income. Although a cash flow statement was not prepared, depreciation (excluding goodwill) rose to ¥55,076 million, signaling healthy investment capacity.

The company plans a full-year dividend of ¥39.00 per share after taking into account the 1-for-4 stock split on July 1, 2026: ¥19 interim and ¥20 year-end. This represents an effective increase from the prior year's ¥38.50 (adjusted for the split), underscoring a commitment to steady shareholder returns.

Sumitomo Electric highlighted the following key risks:

• Middle East instability continues to pressure sales and raise material and logistics costs, especially for the automotive segment.
• Copper price volatility: while higher copper prices boost revenue, they also lift costs, as seen in the automotive division’s profit erosion.
• Currency fluctuations: a weak yen supports earnings from exports and overseas subsidiaries but could inflate imported raw material prices if it falls too far.
• Supply chain disruptions: any recurrence of semiconductor shortages or logistics bottlenecks could hamper production and deliveries in automotive and electronics.
• Sustainability of information & communications demand: data center investment remains robust, but a future slowdown or tapering of AI-related demand is a risk.
• Geopolitical risk expansion: protectionist trade policies and rising international tensions could affect the company’s global operations.

Reflecting the stronger-than-expected first quarter, Sumitomo Electric raised its FY2027 forecasts. The revision added ¥100,000 million to revenue, ¥25,000 million to operating profit, ¥28,000 million to recurring profit, and ¥20,000 million to net income.

(Note: EPS reflects the 1-for-4 stock split; prior-year figures are split-adjusted.)

The full-year dividend is set at ¥39.00 per share, maintaining a real increase post-split and confirming a shareholder-friendly stance.