Progress Management Risks in Unprofitable and Long-Term SI Projects
First written in FY2017. 15 of 26 entries say "Mitigated", first in FY2019-Q2. Latest entry: FY2026.
The whole theme swung hardest in 2024: 19 of 60 companies on the "Worse" side.
28 other companies' latest entry also says "Mitigated".
- FY2026MitigatedAnnual report
「Gross profit from systems integration increased 20.9% year on year to ¥26,298 million, reflecting the effect of higher revenue and the largely offsetting impact of the substantial effective price increase for VMware products in the previous fiscal year through price pass-through, and the gross margin was 16.1% (14.4% in the same period of the previous year).」
The SI gross margin improved from 14.4% to 16.1%, and the project profitability indicator improved as the impact of the previous fiscal year's VMware pricing revision was absorbed through price pass-through, among other measures. - FY2025-H1WorsenedAnnual report
「Gross profit from systems integration, including equipment sales, increased 9.7% year on year to ¥8,313 million (¥7,578 million in the same period of the previous year) after absorbing the impact of higher costs resulting from VMware's revised pricing structure, and the gross margin was 12.5% (14.4% in the same period of the previous year).」
SI gross profit increased, but the gross margin declined from 14.4% in the same period of the previous year to 12.5% against a backdrop of higher costs resulting from VMware's revised pricing structure, among other factors. - FY2024WorsenedAnnual report
「Gross profit from systems integration, including equipment sales, increased 2.6% year on year to ¥19,042 million (¥18,553 million in the same period of the previous year), and the gross margin was 15.6% (16.7% in the same period of the previous year).」
SI gross profit increased, but the gross margin declined from 16.7% to 15.6%. Project profitability risk has deteriorated against a backdrop of longer schedules for large, complex projects and higher upfront costs. - FY2024-Q3WorsenedAnnual report
「Gross profit from systems integration, including equipment sales, increased 0.8% year on year to ¥12,746 million (¥12,642 million in the same period of the previous year), and the gross margin was 14.7% (15.7% in the same period of the previous year).」
As longer project schedules associated with an increase in large-scale projects continued, the SI gross margin declined from 15.7% in the same period of the previous year to 14.7%, deteriorating the project profitability indicator. - FY2024-Q2WorsenedAnnual report
「Gross profit from systems integration, including equipment sales, declined 5.1% year on year to ¥7,578 million (¥7,989 million in the same period of the previous year), and the gross margin was 14.4% (15.1% in the same period of the previous year).」
The SI gross margin declined from 15.1% in the same period of the previous year to 14.4% due to longer project schedules associated with an increase in large-scale projects, among other factors, deteriorating the project profitability indicator. - FY2024-Q1WorsenedAnnual report
「Revenue from systems construction and equipment sales, which is recognized on a one-time basis, declined 5.1% year on year to ¥7,242 million (¥7,628 million in the same period of the previous year), as larger and more complex projects have tended to require more time for revenue recognition.」
Larger and more complex projects have required more time for revenue recognition, resulting in a decline in systems construction revenue. The SI gross margin also declined from 14.9% in the same period of the previous year to 13.4%. - FY2023MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 24.2% year on year to ¥18,553 million (¥14,942 million in the same period of the previous year), and the gross margin was 16.7% (15.7% in the same period of the previous year).」
The SI gross margin increased from 15.7% to 16.7%, improving the project profitability indicator. However, risks remain, including progress management for large, complex projects and higher outsourcing rates. - FY2023-Q3MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 32.5% year on year to ¥12,642 million (¥9,544 million in the same period of the previous year), and the gross margin was 15.7% (13.9% in the same period of the previous year).」
The SI gross margin increased from 13.9% in the same period of the previous year to 15.7%, improving the project profitability indicator. - FY2022-Q3MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 15.6% year on year to ¥9,544 million (¥8,255 million in the same period of the previous year), and the gross margin was 13.9% (13.8% in the same period of the previous year).」
The SI gross margin increased from 13.8% in the same period of the previous year to 13.9%, and the project profitability indicator continued to improve. - FY2022-Q2MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 22.9% year on year to ¥5,869 million (¥4,777 million in the same period of the previous year), and the gross margin was 13.3% (12.5% in the same period of the previous year).」
The SI gross margin increased from 12.5% in the same period of the previous year to 13.3%, improving the project profitability indicator. - FY2022-Q1MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 43.0% year on year to ¥2,848 million (¥1,991 million in the same period of the previous year), and the gross margin was 13.7% (10.5% in the same period of the previous year).」
The SI gross margin increased from 10.5% in the same period of the previous year to 13.7%, improving the project profitability indicator. - FY2021-Q3MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 18.8% year on year to ¥8,255 million (¥6,951 million in the same period of the previous year), and the gross margin was 13.8% (12.4% in the same period of the previous year).」
The SI gross margin increased from 12.4% in the same period of the previous year to 13.8%, improving the project profitability indicator. - FY2021-Q2MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 14.5% year on year to ¥4,777 million, and the gross margin was 12.5% (11.6% in the same period of the previous year).」
The SI gross margin increased from 11.6% in the same period of the previous year to 12.5%, improving the project profitability indicator. - FY2021-Q1MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 5.4% year on year to ¥1,991 million, and the gross margin was 10.5% (10.4% in the same period of the previous year).」
The SI gross margin increased slightly from 10.4% in the same period of the previous year to 10.5%, improving the project profitability indicator. - FY2020-Q3WorsenedAnnual report
「Gross profit from systems integration, including equipment sales, increased 8.1% year on year to ¥6,951 million (¥6,429 million in the same period of the previous year), and the gross margin was 12.4% (13.3% in the same period of the previous year).」
SI gross profit increased, while the gross margin declined from 13.3% in the same period of the previous year to 12.4%, deteriorating the project profitability indicator. - FY2020-Q2Decline in the SI gross marginAnnual report
「Gross profit from systems integration, including equipment sales, increased 13.3% year on year to ¥4,174 million, and the gross margin was 11.6% (11.9% in the same period of the previous year).」
SI gross profit increased, but the gross margin declined from 11.9% in the same period of the previous year to 11.6%. - FY2020-Q1MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 23.3% year on year to ¥1,890 million, and the gross margin was 10.4% (10.1% in the same period of the previous year).」
The SI gross margin increased slightly from 10.1% in the same period of the previous year to 10.4%, improving the project profitability indicator. - FY2019MitigatedAnnual report
「Gross profit from systems integration, including equipment sales, increased 36.3% year on year to ¥9,780 million, and the gross margin was 14.0%.」
Against a backdrop that included organizational restructuring and tighter utilization management, the SI gross margin increased from 10.4% in the same period of the previous year to 14.0%, improving the project profitability indicator. - FY2019-Q3MitigatedAnnual report
「Gross profit from systems integration increased 35.4% year on year to ¥5,960 million, and the gross margin was 13.3% (10.4% in the same period of the previous year).」
The SI gross margin increased from 10.4% in the same period of the previous year to 13.3%, improving the project profitability indicator. - FY2019-Q2MitigatedAnnual report
「Gross profit from systems integration increased 21.3% year on year to ¥3,370 million, and the gross margin was 11.8% (10.3% in the same period of the previous year).」
The SI gross margin increased from 10.3% in the same period of the previous year to 11.8%, improving the decline in the project profitability indicator observed through the previous quarter. This does not state that the risk of managing the progress of long-term, large-scale projects has been eliminated. - FY2019-Q1Slight decline in the SI gross profit marginAnnual report
「SI gross profit increased 0.7% year on year to ¥1,447 million, and the gross profit margin was 10.5% (10.6% in the same period of the previous year).」
The SI gross margin declined 0.1 percentage points from the same period of the previous year, indicating a slight deterioration in the risk indicator for project profitability management. - FY2018RestatedAnnual report
「Large-scale construction projects generally may require a long period before acceptance, necessitating more detailed project progress management. Profit margins may also decline due to competition, including lower profitability resulting from offering customers competitively priced proposals to win projects. If the group is unable to manage project progress appropriately due to system defects, specification changes, unexpected personnel requirements or other factors, it may be unable to secure an appropriate level of profit and projects may become unprofitable on an individual basis.」
The company reconfirmed the risks involving progress management for long-term, large-scale SI projects, lower margins due to competition, and projects becoming unprofitable due to defects and specification changes. - FY2018-Q2WorsenedAnnual report
「The gross profit margin for system integration was 10.3% (10.8% in the same period of the previous year).」
The SI gross profit margin declined 0.5 percentage points from the same period of the previous year, and the company reported deterioration in an indicator related to the risk of managing the profitability of SI projects. - FY2017First statedAnnual report
「Large-scale construction projects generally may require a long period before acceptance, necessitating more detailed project progress management. If the group is unable to manage project progress appropriately due to system defects, specification changes, unexpected personnel requirements or other factors, it may be unable to secure an appropriate level of profit and projects may become unprofitable on an individual basis.」
The company explicitly identified risks involving progress management for long-term, large-scale SI projects and deterioration in project profitability due to specification changes, subcontracting and personnel deployment. It also stated that profit margins declined during the fiscal year due to unprofitable projects.