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Investment Bridge Announces Investment Opinion: Bridge Report on FREUND CORPORATION: First Half FY2/13 Earnings Stronger Than Expected, Full Year Estimates Call for Continued Strong Earnings Growth

Wednesday, November 28, 2012 8:30 AM


Investment Bridge, one of Japan's leading IR services companies, releases an updated "Bridge Report" on FREUND CORPORATION (JASDAQ:6312) reviewing its first half FY2/13 earnings results and full year FY2/13 earnings estimates.

Report Highlights:

  • During the first half of FY2/13, sales and current profit rose by 24.0% and 119.0% year-over-year respectively. Machinery business sales grew on the back of favorable demand from domestic generic drug applications and expansion of its global business. Furthermore, contracted manufacture of dietary supplements contributed to sales growth of the chemicals and foods segment.
  • Full year estimates remain unchanged and call for 6.3% and 16.6% year-over-year growth in sales and current profit. Despite high attainment rates of full year sales and current profit target of 53.6% and 75.9% respectively, estimates were left unchanged due to the potential for delays in delivery of products and a stronger yen.
  • Capital investments both within and outside of Japan have become active, and FREUND is expected to see continued strong earnings as it implements measures to capture demand.

FREUND CORPORATION manufactures and sells granulating, coating, and drying machinery used by the pharmaceuticals, foods, fine chemical and other industries. The Company also manufactures and sells pharmaceutical excipients, food preservatives, dietary supplement food materials, and other products using its machinery. The company divides its sales between two main divisions of the machinery business and the chemicals and foods business segments.

The most recently released Bridge Report highlights the stronger than expected first half earnings results including a 24.0% year-over-year increase in sales to JPY8.67 billion due to strong demand from generic drug manufacturers and favorable overseas sales. Sales of the machinery segment and chemical and foods segment grew by 26.7% and 19.2% year-over-year to JPY5.61 and JPY3.06 billion respectively. Gross profit margin declined slightly due to the stronger yen, but restraint in fixed costs allowed operating profit to rise by just under 2.1 times year-over-year to JPY893 million. Sales and operating profit exceeded previous estimates by 7.1% and 49.0% respectively.

The Bridge Report also highlights the fact that despite these stronger than expected first half earnings, FREUND has left its full year FY2/13 earnings unchanged. Consequently sales and operating profit are expected to rise by 6.3% and 12.7% year-over-year to JPY16.2 and JPY1.2 billion respectively. The Company cites the potential for delays in product deliveries and a stronger yen as the main reasons to maintain its current earnings estimates.

At the end of the first half, total assets declined by JPY281 million from the end of the previous term to JPY14.06 billion. Equity ratio improved by 3% points to 61.3%.

To view the full report, please go to the following.
URL: http://www.bridge-salon.jp/report_bridge/archives/eng/6312/20121128.html

About Bridge Report:
Bridge Report is produced by Investment Bridge Co., Ltd. and provides accurate and objective information about the earnings, business strategies, and other information of publicly traded Japanese companies.

(Source: Business Wire )
(Source: Quotemedia)

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