Lower Facility Utilization and Higher Fixed-Cost Burden When Demand Falls Short
First written in FY2016. 3 of 9 entries say "Mitigated", first in FY2020. Latest entry: FY2026.
Fuso Chemical 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.
8 other companies' latest entry also says "Mitigated".
- FY2026MitigatedAnnual report
「The Phase I facilities at the Kashima Plant completed certification and reached full operation from the end of fiscal 2024, with improved capacity utilization contributing to higher profit in fiscal 2025. The new production line at the Kyoto Plant progressed through certification earlier than expected, and the plant is transitioning to a structure capable of full-scale operation from the end of fiscal 2025.」
Customer qualification and full-scale operation of the new equipment are progressing, mitigating from an equipment-operations perspective the risk of lower utilization and fixed-cost burden if demand falls short. - FY2025MitigatedAnnual report
「The new facilities at the Kashima Plant reached full operation by the end of fiscal 2024. …To meet increased demand, we achieved a 10% increase in production over the original plan.」
The company reports that the new facilities reached full operation and production was 10% above plan, mitigating the risks of lower capacity utilization and a fixed-cost burden from insufficient demand in terms of facility operations during the fiscal year. - FY2024MaterialisedAnnual report
「Although the weaker yen had a positive effect, operating profit fell below that of the previous consolidated fiscal year, with sales and profit declining due to lower net sales and higher costs from increased depreciation and startup expenses associated with the full-scale operation of new manufacturing facilities at the Kashima Plant, higher energy prices and lower capacity utilization resulting from production adjustments.」
Lower capacity utilization associated with weak demand and production adjustments materialized as higher costs and weighed on profit, together with depreciation and startup expenses for the new facilities. - FY2024-Q3MaterialisedAnnual report
「Although the weaker yen had a positive effect, operating profit fell below that of the cumulative consolidated period of the previous quarter, with sales and profit declining due to lower net sales and higher costs from increased depreciation and startup expenses associated with the full-scale operation of new equipment at the Kashima Plant, higher energy prices and lower capacity utilization resulting from production adjustments.」
Lower capacity utilization resulting from production adjustments is actually weighing on profit through higher costs, and the risks of lower capacity utilization and a fixed-cost burden when demand falls short have materialized. - FY2024-Q2MaterialisedAnnual report
「Due in part to the impact of higher costs resulting from lower capacity utilization, sales and profit fell below those of the cumulative consolidated period of the previous quarter.」
Lower capacity utilization accompanying weak demand actually weighed on profit through higher costs, and the risks of lower facility utilization and a fixed-cost burden materialized. - FY2022RestatedAnnual report
「When deciding whether to invest in new manufacturing facilities, we make decisions after careful consideration, including thorough reviews of customer requests and market research. When installing new manufacturing facilities or renewing equipment, we are promoting the introduction of facilities designed to minimize costs and improve efficiency, including labor-saving and energy-saving features, with the aim of building a corporate structure capable of withstanding lower capacity utilization.」
The company is addressing capacity-utilization and fixed-cost risks if demand falls short through investment decisions based on market research and labor-saving, energy-saving and efficiency improvements. - FY2021RestatedAnnual report
「When deciding whether to invest in new manufacturing facilities, we make decisions after careful consideration, including thorough reviews of customer requests and market research. When installing new manufacturing facilities or renewing equipment, we are promoting the introduction of facilities designed to minimize costs and improve efficiency, including labor-saving and energy-saving features, with the aim of building a corporate structure capable of withstanding lower capacity utilization.」
The company maintains a policy of addressing fixed-cost and capacity-utilization risks if demand falls short through investment decisions based on market research and labor-saving, energy-saving and efficiency improvements. - FY2020MitigatedAnnual report
「When deciding whether to invest in new manufacturing facilities, we make decisions after careful consideration, including thorough reviews of customer requests and market research. When installing new manufacturing facilities or renewing equipment, we are promoting the introduction of facilities designed to minimize costs and improve efficiency, including labor-saving and energy-saving features, with the aim of building a corporate structure capable of withstanding lower capacity utilization.」
In response to the risk of lower capacity utilization if demand falls short, the company incorporates market research, labor saving, energy saving and efficiency improvements into investment decisions and facility installations. - FY2016First statedAnnual report
「However, if demand for our group’s products does not develop as expected, it may affect the group’s financial position and operating results, including through the burden of fixed costs resulting from lower utilization of production facilities.」
This is described as a demand risk associated with multiple new construction and expansion plans.