Murata Reports Improved Earnings Despite Smartphone Sales Slump

a close up of a device: Huawei Technologies Co. Mate 30 smartphone. © Photographer: Michaela Handrek-Rehle/Bloomberg Huawei Technologies Co. Mate 30 smartphone.

(Bloomberg) -- Murata Manufacturing Co., a key component supplier to the world's smartphone market, reported Thursday an increase in operating profit to 52.4 billion yen ($492 million) in the quarter ending March 31.

The company outdid its year-earlier results, which were 41.7 billion yen, underscoring industry optimism for 5G demand offsetting the impact of Covid-19 on the global economy. Murata forecast a decline in revenue and profit for the current fiscal year due to the virus.

The Kyoto-based firm provides various key components, such as chip capacitors, batteries and circuit boards to top handset makers, including Apple Inc. and Huawei Technologies Co. Its performance often serves as a bellwether for the mobile industry's production outlook, as the orders it receives are an indicator of device manufacturers' planned manufacturing volume.

Smartphone sales have slowed down dramatically during the period of virus-imposed lockdowns, with China, the world's biggest phone market, suffering a record decline. Manufacturers, however, appear undaunted.

Read more: Smartphone Makers Ordering Parts Like There's No Pandemic

Norio Nakajima, a Murata veteran who is set to take over as president in June, told Bloomberg News earlier this month he expects continued robust demand from handset makers despite the economic blow from the Covid-19 pandemic. Customers who'd waited for better fifth-generation wireless networks and devices before replacing their old phones should prop up the industry's bottom line, he said.

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