TDK: Fiscal 2Q21 Financial Results

TDK Corporation published its financial results for 2FQ21 ending September 30, 2020.

The Japanese company produced passive components, sensors, energy and magnetic products.

These later are made up of HDD heads, suspensions assemblies (HSA) and magnets. Sales for this segment decreased 19.4% from ¥110.0 billion to ¥88.7 billion (or US$ 837 million) from 1FH20 to 1FH21 with profit from ¥6.7 million to loss of ¥2.5 million. Revenue for HDD heads and HSAs decreased to the ICT market.

Quarterly revenue of this magnetic business was ¥50.4 billion, up 32% Q/Q and down 8% Y/Y.

1FH21 results for magnetic application products segment

And when it comes to heads, in Q1 the company was adversely affected by the suspension of the factory operations. But now the production of a customer has gradually rebounded, and it will lead to improvements.

Because of the decline in the total demand of HDDs, there was a drop of heads and HSAs. But he HDD suspensions have been favorable with a customer for the nearline HDD which increased its shipments.

On Q/Q basis for heads, volume index has improved from 55 in Q1 to the 91 in Q2. For HSAs, TDK had more orders from major customers on the nearline HDD as well as for early-stage actuators and smaller type. Those are the more profitable, and the products have been pushed up the sales.

Expectations
For magnetic application products, TDK expects revenue down 5% to 8% in 3FQ21.

Although volume is going to grow for nearline HDD heads, those for CE, such as for PCs and game consoles, are going to decrease next quarter.

For the overall head business, sales volume will go down by 4%. Sales of HSAs will go down as well. As for the suspension business, nearline suspensions are doing well and the firm sees a slight increase from the second quarter.

Earnings call transcript