Improving and Maintaining Margins

「In IT Solutions, revenue from product sales and product maintenance increased, but revenue was ¥72,570 thousand, down ¥88,928 thousand, or 55.1%, from the same quarter of the previous year, mainly because of the significant impact of the exclusion of 3 consolidated subsidiaries. Segment profit benefited from lower cost of sales at the 3 companies excluded from consolidation and reductions in costs, particularly outsourcing and labor costs.」

「The cost-of-sales ratio rose significantly to 90.9%, compared with 78.5% in the previous year, and gross profit amounted to ¥66.330 million, down 52.1% year on year.」

「Because expected orders did not progress as anticipated, the cost-of-sales ratio, including subcontracting expenses and labor costs, increased. In addition, depreciation of goodwill and other expenses increased, resulting in an operating loss of ¥88.233 million, compared with an operating loss of ¥40.065 million in the same interim period of the previous year. Ordinary income and loss was an ordinary loss of ¥86.428 million, compared with an ordinary loss of ¥39.695 million in the same interim period of the previous year.」

「In terms of earnings, the increase in cost of sales resulted in an operating loss of ¥40.065 million, compared with an operating loss of ¥10.524 million in the same period of the previous year, and an ordinary loss of ¥39.695 million, compared with an ordinary loss of ¥9.401 million.」

「The company pursued cost improvements by reviewing contract terms and other matters, but progress fell short of plan. Despite the decline in revenue, cost of sales increased to ¥378.717 million. As a result, the cost-of-sales ratio increased to 71.7%, compared with 67.6% in the previous year.」

「Revenue for the cumulative third quarter amounted to ¥380.085 million, down 7.4% year on year. In terms of earnings, the operating loss was ¥16.028 million, compared with an operating loss of ¥28.060 million in the same period of the previous year, and the ordinary loss was ¥12.691 million, compared with an ordinary loss of ¥27.667 million. The quarterly net loss attributable to owners of the parent was ¥22.591 million, compared with a quarterly net loss attributable to owners of the parent of ¥31.655 million in the same period of the previous year.」

「As a result, net sales for the cumulative second quarter of the current consolidated fiscal year were ¥253,179 thousand, down 11.0% year on year. The operating loss was ¥10,524 thousand (operating loss of ¥29,059 thousand in the same period of the previous year) and the ordinary loss was ¥9,401 thousand (ordinary loss of ¥28,555 thousand in the same period of the previous year). In addition, the quarterly net loss attributable to owners of the parent was ¥18,471 thousand (quarterly net loss attributable to owners of the parent of ¥30,151 thousand in the same period of the previous year).」

「The operating loss was ¥12,188 thousand (operating loss of ¥20,694 thousand in the same period of the previous year) and the ordinary loss was ¥12,172 thousand (ordinary loss of ¥20,432 thousand in the same period of the previous year).」

「As a result, net sales for the cumulative third quarter of the current consolidated fiscal year were ¥410,793 thousand, down 45.7% year on year. The operating loss was ¥28,060 thousand (operating income of ¥3,801 thousand in the same period of the previous year) and the ordinary loss was ¥27,667 thousand (ordinary income of ¥7,258 thousand in the same period of the previous year). In addition, the quarterly net loss attributable to owners of the parent was ¥31,655 thousand (quarterly net income attributable to owners of the parent of ¥21,339 thousand in the same period of the previous year).」

「As a result, net sales for the cumulative second quarter of the current consolidated fiscal year were ¥284,771 thousand, down 16.5% year on year. The operating loss was ¥29,059 thousand (operating loss of ¥11,365 thousand in the same period of the previous year) and the ordinary loss was ¥28,555 thousand (ordinary loss of ¥9,763 thousand in the same period of the previous year). In addition, the quarterly net loss attributable to owners of the parent was ¥30,151 thousand (quarterly net income attributable to owners of the parent of ¥17,246 thousand in the same period of the previous year).」

「Net sales were ¥117,074 thousand, down 30.0% year on year. The operating loss was ¥20,694 thousand (operating loss of ¥10,875 thousand in the same period of the previous year) and the ordinary loss was ¥20,432 thousand (ordinary loss of ¥9,540 thousand in the same period of the previous year).」

「As a result of these initiatives, net sales were ¥757,895 thousand, up 70.2% year on year. Operating income was ¥3,801 thousand (operating loss of ¥17,429 thousand in the same period of the previous year) and ordinary income was ¥7,258 thousand (ordinary loss of ¥10,972 thousand in the same period of the previous year), reflecting higher profit from increased net sales, lower cost of sales following a review of project management, and an increase in selling, general and administrative expenses, among other factors. In addition, gains on the sale of shares in affiliated companies and other factors resulted in quarterly net income attributable to owners of the parent of ¥21,339 thousand, down 83.0% year on year.」

「In addition, higher net sales and improved productivity increased gross profit, resulting in an operating loss of ¥11,365 thousand (operating loss of ¥21,284 thousand in the same period of the previous year) and an ordinary loss of ¥9,763 thousand (ordinary loss of ¥19,184 thousand in the same period of the previous year).」

「Although gross profit increased with higher net sales, increased investment-related expenses, including costs to secure personnel and plan IT infrastructure to strengthen the management structure for future growth, resulted in an operating loss of ¥10,875 thousand (operating loss of ¥9,336 thousand in the same period of the previous year) and an ordinary loss of ¥9,540 thousand (ordinary loss of ¥8,216 thousand in the same period of the previous year).」

「Lower cost of sales following a review of project management and reductions in selling, general and administrative expenses, among other factors, resulted in an operating loss of ¥17,429 thousand (operating loss of ¥32,952 thousand in the same period of the previous year) and an ordinary loss of ¥10,972 thousand (ordinary loss of ¥31,110 thousand in the same period of the previous year).」

「Lower cost of sales following a review of project management and reductions in selling, general and administrative expenses, among other factors, resulted in an operating loss of ¥21,284 thousand (operating loss of ¥28,114 thousand in the same period of the previous year) and an ordinary loss of ¥19,184 thousand (ordinary loss of ¥26,321 thousand in the same period of the previous year).」

「The operating loss narrowed to ¥9,336 thousand (operating loss of ¥24,624 thousand in the same period of the previous year) and the ordinary loss to ¥8,216 thousand (ordinary loss of ¥23,126 thousand in the same period of the previous year), mainly because a review of project management reduced cost of sales. In addition, gains from the sale of investment securities and other factors resulted in quarterly net income attributable to owners of the parent of ¥43,982 thousand (quarterly net loss attributable to owners of the parent of ¥27,753 thousand in the same period of the previous year).」

「Although we worked to reduce selling, general and administrative expenses, the delay in part of the system design work prevented us from allocating human resources to planned orders, resulting in lost opportunities. In addition, a provision for contract losses of ¥24,686 thousand was recorded for the excess of the estimated total cost of sales for the delayed project over revenue already recognized. These and other factors resulted in an operating loss of ¥64,386 thousand (operating loss of ¥47,215 thousand in the previous fiscal year) and an ordinary loss of ¥62,531 thousand (ordinary loss of ¥56,287 thousand in the previous fiscal year).」

「Although we worked to reduce cost of sales and selling, general and administrative expenses, the operating loss was ¥32,952 thousand (operating loss of ¥63,014 thousand in the same period of the previous year) and the ordinary loss was ¥31,110 thousand (ordinary loss of ¥72,051 thousand in the same period of the previous year). An extraordinary gain of ¥22,233 thousand was recorded on the sale of investment securities, but a ¥6,000 thousand surcharge related to inappropriate accounting practices in prior years was recorded as an extraordinary loss. As a result, the quarterly net loss attributable to owners of the parent was ¥18,969 thousand (quarterly net loss attributable to owners of the parent of ¥130,369 thousand in the same period of the previous year).」

「Although we worked to reduce expenses, the operating loss was ¥28,114 thousand (operating loss of ¥53,777 thousand in the same period of the previous year) and the ordinary loss was ¥26,321 thousand (ordinary loss of ¥53,791 thousand in the same period of the previous year).」

「Although the cost-of-sales ratio as a percentage of net sales improved, additional audits and other procedures related to the fiscal year ending March 2019 were conducted because of inappropriate accounting practices in prior years. In addition, the recording of a ¥6 million surcharge as an extraordinary loss, among other factors, resulted in an operating loss of ¥24,624 thousand (operating loss of ¥38,923 thousand in the same period of the previous year), an ordinary loss of ¥23,126 thousand (ordinary loss of ¥39,004 thousand in the same period of the previous year), and a quarterly net loss attributable to owners of the parent of ¥27,753 thousand (quarterly net loss attributable to owners of the parent of ¥30,102 thousand in the same period of the previous year).」

「Although we worked to reduce selling, general and administrative expenses, the decline in net sales resulted in an operating loss of ¥47,215 thousand (operating income of ¥5,759 thousand in the same period of the previous year).」

「Although we worked to reduce selling, general and administrative expenses, the cost-of-sales ratio failed to improve, resulting in an operating loss of ¥63,014 thousand (operating loss of ¥2,388 thousand in the same period of the previous year) and an ordinary loss of ¥72,051 thousand (ordinary loss of ¥1,661 thousand in the same period of the previous year).」

「The increase in the cost-of-sales ratio and the rise in selling, general and administrative expenses at アイデポルテ, which became a consolidated subsidiary in October 2017, among other factors, resulted in an operating loss of ¥53,777 thousand (operating income of ¥5,991 thousand in the same period of the previous year), an ordinary loss of ¥53,791 thousand (ordinary income of ¥6,530 thousand in the same period of the previous year), and a quarterly net loss attributable to owners of the parent of ¥61,907 thousand (quarterly net loss attributable to owners of the parent of ¥308,950 thousand in the same period of the previous year).」

「The increase in the cost-of-sales ratio resulted in an operating loss of ¥38,923 thousand (operating loss of ¥2,541 thousand in the same period of the previous year), an ordinary loss of ¥39,004 thousand (ordinary loss of ¥2,364 thousand in the same period of the previous year), and a quarterly net loss attributable to owners of the parent of ¥30,102 thousand (quarterly net loss attributable to owners of the parent of ¥2,542 thousand in the same period of the previous year).」

「Although the cost-of-sales ratio improved slightly and we worked to reduce selling, general and administrative expenses, operating income was ¥4,434 thousand (operating loss of ¥49,139 thousand in the same period of the previous year) and ordinary income was ¥5,576 thousand (ordinary loss of ¥42,632 thousand in the same period of the previous year). However, because a provision for doubtful accounts of ¥315,125 thousand for receivables from 北栄 was recorded as an extraordinary loss, the net loss for the period attributable to owners of the parent was ¥320,302 thousand (net loss for the period attributable to owners of the parent of ¥255,123 thousand in the same period of the previous year).」

「Although the cost-of-sales ratio improved slightly and we worked to reduce selling, general and administrative expenses, the operating loss was ¥2,388 thousand (operating loss of ¥40,897 thousand in the same period of the previous year) and the ordinary loss was ¥1,661 thousand (ordinary loss of ¥36,706 thousand in the same period of the previous year).」

「Although we worked to reduce selling, general and administrative expenses, the increase in the cost-of-sales ratio resulted in operating income of ¥5,991 thousand (operating loss of ¥22,118 thousand in the same period of the previous year) and ordinary income of ¥6,530 thousand (ordinary loss of ¥20,791 thousand in the same period of the previous year). However, because a provision for doubtful accounts of ¥315,125 thousand for receivables from 北栄 was recorded as an extraordinary loss, the quarterly net loss attributable to owners of the parent was ¥308,950 thousand (quarterly net loss attributable to owners of the parent of ¥24,760 thousand in the same period of the previous year).」

「Although we reduced selling, general and administrative expenses, the cost-of-sales ratio as a percentage of net sales improved only slightly. As a result, the operating loss was ¥2,541 thousand (operating loss of ¥14,339 thousand in the same period of the previous year), the ordinary loss was ¥2,364 thousand (ordinary loss of ¥14,623 thousand in the same period of the previous year), and the quarterly net loss attributable to owners of the parent was ¥2,542 thousand (quarterly net loss attributable to owners of the parent of ¥14,833 thousand in the same period of the previous year).」

「Although we reduced selling, general and administrative expenses, the increase in the cost-of-sales ratio resulted in an operating loss of ¥49,139 thousand (operating income of ¥70,532 thousand in the previous fiscal year) and an ordinary loss of ¥42,632 thousand (ordinary income of ¥62,802 thousand in the previous fiscal year).」

「Although we worked to reduce selling, general and administrative expenses, the decline in net sales and the increase in the cost-of-sales ratio resulted in an operating loss of ¥40,897 thousand (operating income of ¥49,813 thousand in the same period of the previous year).」

「Meanwhile, the decline in profit margins continues.」

「Corporate IT (information technology) investment is showing signs of recovery, but improving profit margins remains an issue.」