TDK, the Japanese electronics maker, experienced a significant decline in its first-quarter net profit, leading to a revision of its full-year guidance. The company attributed this decline to weaker demand for components used in data centers and cars.

Challenging Q1 Results

TDK reported that its net profit for the quarter ending June dropped by 53%, falling to Y14.725 billion ($102.7 million) from Y31.41 billion in the previous year. Furthermore, first-quarter revenue saw a 1.4% decrease to Y503.40 billion due to decreased demand for electronics parts used in smartphones, tablets, laptops, and hard-disk drives for data centers.

Revised Projections

As a result of these challenging market conditions, TDK has revised its revenue and net profit forecasts for the fiscal year ending March 2024. It anticipates a 9.7% decrease in revenue to Y1.970 trillion, down from the previously projected Y2.020 trillion. Similarly, the company expects net profit to decline by 8.0% to Y105.00 billion, down from the previous forecast of Y147.00 billion.

Industry-Specific Factors

TDK attributes the revised guidance to weaker than anticipated sales of hard-disk-drive parts, particularly in data centers where production is expected to decrease significantly. Additionally, sales of electronics parts for cars are anticipated to be lower as certain clients have taken measures to manage their inventories.

While these challenges persist, TDK remains committed to navigating market fluctuations and meeting customer demands.

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