Tamron Co.,Ltd. Q2 FY2025 earnings call

Macro and Market Environment

• Geopolitical risks persist, and U.S. tariff policy has created market uncertainty, increasing outlooks ambiguity. The yen reversed the 2024 significant depreciation trend to appreciate, creating negative impacts for the company.
• The interchangeable camera market grew in both volume and value, while the interchangeable lens market saw volume growth but value decline due to the 2024 H1 high base effect. The surveillance market achieved stable growth, and the automotive market continued growing driven by ADAS adoption.

Capital Return and Corporate Actions

• Completed 4 billion yen in share repurchases and canceled treasury shares equal to 7% of total outstanding shares, and implemented a stock split in July 2025.

Operational Milestones

• The second Vietnam factory has begun full operations to expand production capacity, support existing business growth, and strengthen supply chain stability.
• Progressed new product development planned for H2 2025, and strengthened new business creation through partnerships and investments in startup companies.
• Product development for new markets continues: the company expanded its own-brand interchangeable lens lineup, adding 7 new models in 2024 including its first Canon RF mount lens.

1. Photography-related Business: Reported 30 billion yen in revenue (9% lower YoY), accounting for 71.9% of total first half revenue. YoY operating profit decreased, driven by lower revenue, yen appreciation headwinds, and increased SG&A, even with improved gross margin. Both own-brand and OEM segments saw YoY revenue declines, though performance beat internal plans. Regionally, Japan achieved 3% YoY revenue growth and India grew 1.5x, while Europe, North America, China, and other parts of Asia saw YoY declines after 2024 H1 high growth. 2. Surveillance & FA-related Business: Reported 6 billion yen in revenue (slight YoY decrease), accounting for 14.4% of total first half revenue. Excluding yen appreciation impacts, revenue grew YoY. Surveillance camera lenses and camera modules achieved double-digit YoY revenue growth, offset by declines in FA/machine vision lenses (due to customer inventory adjustments) and video conference lenses (due to market weakness). Operating profit grew double-digit YoY with an operating margin of over 15%, more than doubling the originally planned profit, and revenue came in nearly 20% above plan. Excluding foreign exchange impacts, the segment achieved revenue and profit growth. 3. Mobility & Healthcare, Other Business: Reported 5.8 billion yen in revenue (slight YoY increase), accounting for 13.9% of total first half revenue. Automotive camera lenses for ADAS continued steady growth despite 2024 H1 high comparison base and weak Chinese auto sales. Medical lenses, a key focus area, achieved double-digit revenue growth leveraging the company's ultra-small diameter and thin film technology. Operating profit saw a slight YoY decrease due to increased R&D investment for new business cultivation, but more than doubled planned profit. Excluding foreign exchange impacts, the segment achieved revenue and profit growth. Total company first half revenue was 41.7 billion yen, 7% lower YoY, with operating profit down 15% YoY, but both revenue and profit beat original plans, with operating profit 10% above plan and operating margin above 22%.

• Overall full-year guidance: Management maintained the expectation of returning to double-digit revenue and profit growth in H2 from H1's YoY decline, and achieving full-year revenue and profit growth, despite a slight downward adjustment to the overall full-year outlook due to expected lower order volume for some photography OEM models. The negative impact of U.S. additional tariffs is expected to be fully offset by cost reduction and productivity improvement efforts.
• Photography-related Business: Maintained the original full-year plan of 38.4 billion yen in revenue with an expected YoY increase. The full-year target of growing revenue and profit and improving profit margin remains unchanged. 6 new own-brand products are scheduled to launch in H2 2025, covering Sony E-mount, Nikon Z-mount, and Canon RF mount, including the company's first high-power zoom lens for RF and Z mounts. The company is strengthening its development pipeline to hit the target of 10 new product launches in 2026.
• Surveillance & FA-related Business: Full-year revenue and profit guidance is upgraded from the original plan of slight revenue growth with declining profit to a mid-high single-digit increase in both revenue and profit with improved margin. Surveillance lenses are expected to continue strong double-digit growth, and the company will leverage its broad product lineup covering visible to infrared spectrum to drive growth in DX and social infrastructure monitoring applications.
• Mobility & Healthcare, Other Business: Full-year revenue guidance is maintained at the original plan despite a slight downward adjustment to the automotive segment outlook. The long-term target of building a 10 billion yen automotive business remains unchanged. Medical lens revenue guidance is upgraded to a 1.5x YoY increase, targeting the 1 billion yen revenue milestone, leveraging the company's core ultra-small lens and thin film technology in minimally invasive medical applications.

• Persistent geopolitical risks and heightened uncertainty from U.S. tariff policy have increased overall business outlook uncertainty. Yen appreciation after a multi-year period of yen depreciation created negative impacts on first half revenue and profit, with 650 million yen in negative revenue impact and 350 million yen in negative gross profit impact in H1.
• U.S. additional tariffs announced in 2025 are expected to create a negative total annual profit impact of approximately 400 million yen, with most impact concentrated on the own-brand photography business. While management expects this impact can be fully absorbed by cost reduction, it remains a key source of uncertainty for full-year results.
• The photography business faces YoY revenue headwinds from the high 2024 H1 comparison base and market contraction in the interchangeable lens space, with weaker demand in Europe, North America, China, and other Asian markets. The FA lens segment faces ongoing headwinds from customer inventory adjustment, and the video conference lens segment faces sustained market downturn.
• The automotive segment faces short-term headwinds from sluggish auto sales in China, and the photography OEM segment expects lower order volume for certain models in H2.

No question and answer section was included in the provided transcript.