Fanuc Cuts Profit Target on Signs of Slowing Demand in China

Fanuc Corp. lowered its full-year profit forecast as demand from the information technology industry declines. The shares plunged in Frankfurt and New York trading.

The maker of industrial robots and factory automation equipment said net income will probably be 159.5 billion yen ($1.3 billion) in the 12 months to March 31. That’s 17 percent lower than its April forecast and trails the 198.6 billion yen average of 20 analysts’ estimates compiled by Bloomberg.

The cut comes only three months after the company doubled its dividend payout ratio and said it would buy back more shares following pressure from New York-based investor Daniel Loeb to share more of its about $8 billion in stockpiled cash with investors. Net income rose 12 percent to 50.8 billion yen in the fiscal first quarter, the company said in a statement, the slowest growth in six quarters.

“Orders are decreasing rapidly towards the end of the first quarter, and are expected to diminish further from the second quarter on,” Fanuc said in a statement on its website. “The future of the Chinese market is uncertain” with signs of a slowdown in demand for factory automation.

The robot maker’s ADRs slumped 8.3 percent in New York trading while its German traded shares fell as much as 11 percent, the biggest intraday drop since April 2011. Earnings were announced after market hours in Tokyo.

Sales gained 21 percent, also the least growth in almost a year-and-a-half, to 197.4 billion yen.

Fanuc shares have gained 16 percent this year in Tokyo, matching the gain in the Nikkei 225 Stock Average. The stock has slumped about 12 percent since April, partly on concern that slowing economic growth in China is undermining demand for factory equipment.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE