Fixed Cost and Impairment Risks Associated with Capital Investment in Production Expansion
First written in FY2020. 3 of 6 entries say "Materialised", first in FY2024-Q1. Latest entry: FY2025.
Daiichi Kigenso Kagaku-Kogyo moved to the "Worse" side of this theme in 2023, 1 year after the typical company in this theme (2022).
The whole theme swung hardest in 2019: 5 of 21 companies on the "Worse" side.
7 other companies' latest entry also says "Materialised".
- FY2025MaterialisedAnnual report
「The additional impairment loss was incurred at the former plant of the Vietnamese subsidiary because, although negotiations initially proceeded toward the comprehensive transfer of the machinery and equipment, leasehold rights and buildings, it was decided, due to administrative procedures and other circumstances, to transfer only the machinery and equipment first. The carrying amount of the fixed assets corresponding to the machinery and equipment was therefore reduced to its recoverable amount.」
An additional impairment loss of ¥226 million was incurred at VREC's former plant following the decision to transfer the machinery and equipment first. The fixed-cost and impairment risks associated with investment in capacity expansion continue to materialize. - FY2025-H1MaterialisedAnnual report
「The additional impairment loss was incurred at the former plant of the Vietnamese subsidiary because, although negotiations initially proceeded toward the comprehensive transfer of the machinery and equipment, leasehold rights and buildings, it was decided, due to administrative procedures and other circumstances, to transfer only the machinery and equipment first. The carrying amount of the fixed assets corresponding to the machinery and equipment was therefore reduced to its recoverable amount.」
Regarding the impairment risk associated with investment in capacity expansion, an additional impairment loss of ¥227 million was incurred on fixed assets corresponding to machinery and equipment at VREC's former plant. - FY2024-Q1MaterialisedAnnual report
「VIETNAM RARE ELEMENTS CHEMICAL JOINT STOCK COMPANY Idle assets Machinery and equipment 190 Leasehold rights 80 Buildings 74 Other 1 Total 346」
Regarding the fixed-cost and impairment risks associated with investment in capacity expansion, an impairment loss of ¥346 million was actually incurred on machinery and equipment, leasehold rights, buildings and other assets in connection with the planned sale of VREC's former plant. The Company explained that the loss resulted from the sale of the former plant following the start of operations at the new plant. - FY2022RestatedAnnual report
「The Group is actively pursuing new capital investment in facilities in Japan and overseas to capture growing demand for zirconium. However, if demand for the products supplied by the Group does not develop as forecast, the facilities in which it has invested could incur impairment losses, potentially affecting the Group's operating results and financial condition.」
While continuing capital investment in facilities in Japan and overseas, the Company continues to describe the risk of impairment of facilities if demand falls short, together with the flexible review of investment plans based on demand analysis and strengthened sales efforts. - FY2021RestatedAnnual report
「The Group is actively pursuing new capital investment in facilities in Japan and overseas to capture growing demand for zirconium. However, if demand for the products supplied by the Group does not develop as forecast, the facilities in which it has invested could incur impairment losses, potentially affecting the Group's operating results and financial condition.」
While continuing capital investment in facilities in Japan and overseas, the Company describes the risk of impairment of facilities if demand falls short, as well as the flexible review of investment plans based on demand analysis. - FY2020First statedAnnual report
「However, if demand for the products supplied by the Group does not develop as expected, increases in fixed costs and impairment losses could have a significant impact on the Group's operating results and financial condition.」
The Company has newly identified, as a standalone risk, the risk of higher fixed costs and impairment losses if demand fails to develop as expected in connection with capital investment in facilities in Japan and overseas to capture growing demand for zirconium. It states that it will respond flexibly through facility designs capable of accommodating multi-product manufacturing.