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Investing.com -- Hoya Corporation stock tumbled 8.8% after the company reported a decline in its Life Care segment profit margins for the June quarter, disappointing investors who had expected continued improvement.
The Japanese optical products maker saw its Life Care segment’s pre-tax profit margin drop to 17.9% in the June quarter, down 2.1 percentage points quarter-over-quarter from the 20% level achieved in the March quarter. This segment had been gradually recovering following an IT incident in April last year.
Hoya’s non-GAAP pre-tax profit from normal operations came in at ¥67.4 billion, approximately ¥2 billion below analyst forecasts. Despite the setback, the company expects the Life Care segment’s margins to recover to 20% in the second half of the fiscal year.
In the IT segment, semiconductor mask blanks and photomasks saw a 10% YoY sales increase on a constant currency basis, while HDD substrates grew by 6%. Imaging products recorded 17% growth, driven by increased demand for polarizing glass used in optical isolators amid expanding AI data center capital expenditure.
The Life Care segment showed mixed results with eyeglass lenses growing 11% YoY, contact lenses up 4%, and endoscopes increasing 2%. However, intraocular lenses declined by 2% due to software system rollout issues in Europe, which the company says have been resolved.
Morgan Stanley (NYSE:MS) stated: "While we slightly lower our forecast for Life Care segment, we maintain our EW rating and PT of ¥20,000."
Investors appeared disappointed that Hoya did not announce any share buybacks, as the market had anticipated repurchases in the range of ¥50-100 billion.
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