Iljin Electric records highest-ever performance with 49% increase in Q1 operating profit

Nippon Electric achieved sales of 506.1 billion Korean won and an operating profit of 50.7 billion Korean won in the first quarter of this year, setting a quarterly record high. This is interpreted as a simultaneous increase in domestic and international demand for electrical equipment, with high-profit medium-voltage electrical business leading the performance improvement.

According to the announcement on the 15th, Nippon Electric’s first-quarter sales increased by approximately 11% compared to the same period last year, and operating profit grew by about 49%. The growth rate of operating profit exceeds that of sales, which can be explained not only by increased shipments but also by improvements in product structure or profit structure. Especially, the simultaneous growth momentum of cable and medium-voltage electrical businesses is considered a background factor for this performance.

The company attributes the core factors to the replacement demand for aging electrical infrastructure in the United States and the global boom in data center expansion. Electrical infrastructure refers to the facilities that transmit electricity generated by power plants through transmission networks and substations to industrial sites and households. Recently, with the proliferation of artificial intelligence, the rapid increase in data centers with high power consumption has led to a rise in demand for high-power equipment such as transformers and circuit breakers. This has resulted in a pattern where orders are concentrated among companies capable of providing stable electrical equipment supply.

Nippon Electric also sees a relatively clear potential for future growth. The reason is that with the official operation of the Hongcheng transformer factory, the company’s production capacity to meet the demand for ultra-high-voltage transformers in South Korea, the Americas, and Europe has been enhanced. Ultra-high-voltage transformers are core equipment needed to stably transmit large-scale electricity over long distances and are a category experiencing rapid demand growth amid expanded grid investments.

In fact, Nippon Electric’s order backlog in the first quarter of this year was approximately $1.76B, equivalent to about 2.6496 trillion Korean won. About 70% of this comes from high-power equipment such as transformers and circuit breakers. By region, 74% is overseas, and 24% is domestic. Since order backlog indicates the scale of orders that could potentially convert into future sales, Nippon Electric’s performance trend is likely to be sustained in the short term by overseas electrical equipment investments and the trend of data center expansion.