Renesas revenue jumps 30.2% to ¥435.2 billion as operating margins are forecast to decline
Key Facts
Renesas Electronics reported on October 29 results for the third quarter ended September 30, posting revenue of ¥435.9 billion under IFRS, while operating profit came to ¥565.3 billion after the impact of adjustment items. On a Non-GAAP basis, revenue was ¥435.2 billion, up 30.2% year on year and 7.4% from the previous quarter. Gross margin was 59.0% under IFRS, compared with 59.4% on a Non-GAAP basis. Adjusted operating profit was ¥150.5 billion, with a margin of 34.6%. The results separate usual operating performance from the significant gain on the transfer of the timing business, which lifted the IFRS figures.
Profit attributable to owners of the company was ¥372.2 billion under IFRS, compared with ¥106.3 billion in the same quarter a year earlier. But that figure included a gain of about ¥450.3 billion from the transfer of the timing business, which was completed in July. On a Non-GAAP basis, profit attributable to owners rose to ¥125 billion from ¥88.2 billion a year earlier. The difference between the two figures reflects the impact of the business transfer transaction on results under international standards, while the adjusted figures provide a separate view of profitability after excluding nonrecurring items. Therefore, the ¥372.2 billion figure is not net income excluding exceptional items.
Gross margin on a Non-GAAP basis improved to 59.4% from 57.6% a year earlier. The company attributed the improvement to the weaker yen, a better product mix and lower manufacturing costs. Revenue growth came alongside expansion in the industrial, infrastructure and IoT businesses, which posted revenue of ¥243.8 billion, up 46.4% year on year. Investing.com said the segment was the main growth driver, supported by data-center demand and a recovery in industrial and IoT markets. The company also said revenue for the first nine months benefited from stronger demand and a recovery following distributor-channel inventory adjustments in the previous year, particularly in automotive, industrial, infrastructure and IoT businesses.
In the automotive segment, revenue rose 19.3% to ¥189.5 billion. The company linked the segment's growth to improving demand and a recovery from earlier distributor-channel inventory adjustments. The increase shows that quarterly growth was not limited to the industrial, infrastructure and IoT businesses, although growth in the latter segment was faster according to the reported figures. Group revenue on a Non-GAAP basis was ¥435.2 billion, the measurement basis used for the segment growth rates reported in the results data. These figures keep the picture of operating performance separate from the exceptional increase in IFRS profit linked to the timing business transfer.
For its fourth-quarter guidance, Renesas forecast Non-GAAP revenue of ¥454 billion, within a range of ¥7.5 billion above or below that level. It estimated gross margin at 58% and operating margin at 32%, compared with an actual operating margin of 34.6% in the third quarter. For the year ending December 31, 2026, the company set a revenue range of ¥1,659,281 million to ¥1,674,281 million, with an expected gross margin of 58.6% and operating margin of 33.2%. Results for 2025 showed Non-GAAP revenue of ¥1,318,482 million, gross margin of 57.6% and operating margin of 29.3%. The annual estimates therefore point to higher revenue and margins than the previous year's levels, while the company expects the fourth-quarter operating margin to decline from its third-quarter level.
The company's Tokyo-listed shares fell 6.4% to ¥2,903 during trading on Thursday, October 29, while the Nikkei 225 rose about 0.6% in early trading. In the U.S. market, RNECY closed at $9.35 on October 29, then at $8.94 on October 30. It had closed at $8.97 on October 26, $9.45 on October 27 and $10 on October 28. These closing prices show a decline in the U.S.-traded shares in the last two sessions for which data are available, without identifying the cause of the move on their own. The company had set October 29 as the date for announcing its third-quarter results, and its open calendar page did not show a specific later date for the next results.