Recovery of large-scale capital investments and operating risk
First written in FY2016. 2 of 8 entries say "Mitigated", first in FY2024-Q3. Latest entry: FY2026.
The whole theme swung hardest in 2024: 10 of 25 companies on the "Worse" side.
1 other company's latest entry also says "Other".
- FY2026Recognized the full-year effect of the change in the depreciation commencement criterionAnnual report
「As a result of these changes, operating profit, ordinary profit and profit before income taxes for the consolidated fiscal year increased by ¥210 million compared with the amounts under the previous method.」
It states that changing the depreciation commencement date for production facilities to the start of mass production increased operating profit and other figures for the fiscal year by ¥210 million. - FY2026-H1Changed the depreciation commencement criterionAnnual report
「Beginning at the start of the interim consolidated accounting period, the Company reviewed and changed the timing for commencing depreciation of its production facilities. Previously, the acceptance date of a production facility was deemed to be the start of mass production and was used as the basis for commencing depreciation. However, because changes in the market environment in recent years were expected to create a gap between the acceptance date and the start of mass production, the Company changed to a method under which depreciation begins at the start of mass production, reflecting actual conditions more accurately.」
Because changes in the market environment were expected to create a gap between the acceptance date and the start of mass production, the depreciation commencement criterion for production facilities was changed to the start of mass production. As a result, operating profit and other figures for the interim period increased by ¥105 million. - FY2025WorsenedAnnual report
「As a result, revenue for the consolidated fiscal year was ¥50,643 million, up 8.0% year on year. Although the increase in revenue led to higher profit, operating profit fell 32.7% year on year to ¥2,619 million, mainly due to higher depreciation expense, changes in the product mix and an increase in inventory write-downs for long-outstanding inventory.」
The increase in depreciation expense following the capital investment emerged in the full-year results as a factor behind the decline in operating profit despite higher revenue. - FY2025-H1MitigatedAnnual report
「Commercial production at the Tenth Formulation Building, a new formulation plant, began in August 2024.」
It states that commercial production began at the Tenth Formulation Building after completion, indicating progress toward operating and monetizing the large-scale capital investment. - FY2024-Q3MitigatedAnnual report
「The Phase 1 production facilities are expected to operate at a high utilization rate due to strong orders, and, as the Group has received additional inquiries, it has commenced Phase 2 construction to install manufacturing equipment on the 3 floors that currently lack such equipment, out of all 5 floors available for production equipment in the Tenth Formulation Building.」
For the Phase 1 equipment at the Tenth Formulation Building, it notes expectations for a high utilization rate due to strong orders and the commencement of Phase 2 construction in response to additional inquiries. - FY2018Specified the impact on earnings after capital investmentAnnual report
「For the Group, it is generally necessary to undergo a validation period of approximately 6 months to 1 year after completion of the facilities before commencing full-scale manufacturing. As depreciation expense is recorded from the start of validation, depreciation expense is recorded ahead of revenue.」
Regarding large-scale capital investments, it specifies the approximately 6-month to 1-year validation period after completion and the deterioration in earnings caused by depreciation expense recorded ahead of revenue. - FY2017RestatedAnnual report
「In addition, if the Group is unable to secure orders as expected after making large-scale capital investments, its business performance and other results may be materially affected.」
Continues to note the risk of deteriorating earnings due to delays in capital investment, depreciation expense incurred ahead of sales, and failure to secure anticipated orders. - FY2016First statedAnnual report
「If the Group is unable to secure orders as expected after making large-scale capital investments, its business performance and other results may be materially affected.」
Also notes the loss of order opportunities due to delays in capital investment and the resulting increase in the cost ratio from depreciation expense incurred ahead of sales.