NOK FY2024 slides: Operating profit surges 62.6% as Electronic segment returns to profitability

Introduction & Market Context

NOK Corporation (TYO:7240) presented its financial results for the fiscal year 2024 (ending March 2025) on May 14, 2025, highlighting significant improvement in profitability despite modest sales growth. The Japanese seal and electronic components manufacturer reported that its Electronic Product business returned to profitability for the first time since FY2017, marking a significant turnaround for the segment.

Executive Summary

NOK’s FY2024 results exceeded the company’s latest forecasts, with net sales increasing 2.2% year-over-year to 766.9 billion yen and operating income surging 62.6% to 37.3 billion yen. The operating margin improved substantially from 3.1% to 4.9%. However, net income decreased by 4.1% to 30.3 billion yen, primarily due to a larger gain from divestiture of investment securities recorded in the previous fiscal year.

As shown in the following detailed results table, the company outperformed its forecasts across key metrics:

The company also announced an upward revision of its annual dividend forecast by 5 yen to 105 yen per share, representing a 17.5 yen increase year-on-year.

Detailed Financial Analysis

NOK’s consolidated results show significant improvement in profitability metrics, with operating income rising sharply despite relatively modest sales growth. The detailed breakdown reveals the drivers behind this performance:

By segment, the Seal business maintained stable sales but improved its operating margin, while the Electronic Product segment achieved a remarkable turnaround:

The Seal business, which accounts for approximately 47% of NOK’s total sales, saw flat year-on-year revenue but improved operating income by 12.4% to 26.2 billion yen. This improvement came despite production volume declines among Japanese automakers, offset by continuous price revision activities and sales expansion to non-Japanese customers.

The following waterfall chart illustrates the factors contributing to the Seal segment’s operating income improvement:

The Electronic Product segment, which represents about 48% of total sales, was the standout performer. After years of struggling with profitability, the segment turned profitable with an operating income of 8.9 billion yen, compared to a loss of 1.0 billion yen in FY2023. Sales increased by 3.1% to 371.0 billion yen, with growth in smartphone and HDD applications.

The dramatic improvement in the Electronic Product segment’s operating income is visualized in this waterfall chart:

Strategic Initiatives

NOK continues to focus on improving corporate value through the implementation of its Medium-Term Plan (MTP) initiatives. The company is emphasizing four key strategic areas: growth drivers, management structure, talent leverage, and resource optimization.

The following diagram outlines the company’s approach to improving corporate value:

Key strategic priorities include:

• Improving profitability in the Seal segment by reinforcing activities toward non-Japanese customers
• Making the Electronic Product segment profitable in all financial quarters by minimizing impacts of seasonal fluctuations
• Securing orders at fair prices through price negotiations
• Continuing development and sales expansion toward the shift to electric vehicles
• Cultivating new areas such as green energy and semiconductor equipment

Forward-Looking Statements

For FY2025, NOK forecasts a 7.8% decline in net sales to 707.1 billion yen, primarily due to a stronger yen assumption (140 yen/USD compared to 152.74 yen/USD in FY2024). Despite the projected sales decline, operating income is expected to increase slightly by 1.2% to 37.7 billion yen, with improvements in both the Seal and Electronic Product segments.

The detailed FY2025 forecast shows the expected impact of exchange rates and other factors:

By segment, the Electronic Product business is expected to see the most significant sales decline (-14.3%) but continue its profitability improvement with a 12.0% increase in operating income:

A particularly promising development is the expectation that the Electronic Product segment will be profitable across all quarters in FY2025, including Q4, which has historically been challenging:

NOK also addressed potential impacts from US tariff policies, noting that while direct exports to the US are relatively small, the impact on demand for customers’ products in the US market could be more significant. This potential impact has not been factored into the FY2025 forecasts.

Looking further ahead, NOK is developing its next medium-term plan with a target for 2031 of reaching 1 trillion yen in net sales with an operating margin of 8% or higher. The company continues to focus on shareholder returns through dividends and share buybacks while reducing cross-shareholdings toward an optimal level.

Full presentation:

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