Deterioration in performance due to fixed-cost and expense leverage when sales decline
First written in FY2019. 12 of 20 entries say "Mitigated", first in FY2022-Q1. Latest entry: FY2026.
The whole theme swung hardest in 2020: 7 of 20 companies on the "Worse" side.
4 other companies' latest entry also says "Worsened".
- FY2026WorsenedAnnual report
「As a result, revenue for the current fiscal year was ¥2,641.736 million, down 9.8% from ¥2,929.931 million in the previous fiscal year; operating income was ¥195.129 million, down 53.8% from ¥422.626 million; and ordinary income was ¥192.470 million, down 54.2% from ¥420.477 million.」
A 9.8% decline in revenue resulted in decreases of 53.8% in operating income and 54.2% in ordinary income, again highlighting an earnings structure in which changes in revenue have a significant impact on profit. - FY2026-H1MitigatedAnnual report
「In terms of earnings, the cost of sales ratio declined by 1.5 percentage points from the previous interim accounting period. This reflected the higher proportion of products with relatively low cost ratios in the product sales mix, as well as the results of cost-reduction efforts at the factory becoming apparent.」
Gross profit increased due to a lower cost-of-sales ratio and reduced costs at the factory, while operating income and ordinary income also increased. The company stated that measures to address cost and expense burdens when revenue declines had progressed. - FY2025MitigatedAnnual report
「Selling, general and administrative expenses decreased by 4.8% from the previous fiscal year as a result of thorough budget management based on the expense policy.」
Selling, general and administrative expenses were reduced amid higher revenue, resulting in increases in operating income and ordinary income. The company stated that measures to address fixed-cost and expense leverage when revenue declines had progressed. - FY2025-H1MitigatedAnnual report
「During the interim accounting period, selling, general and administrative expenses decreased by ¥73 million from the previous interim accounting period. The company believes this expense-saving effect will continue throughout the year. Accordingly, the budgeted break-even point has declined for the current fiscal year, creating a structure in which the company can generate profit more readily.」
The company stated that selling, general and administrative expenses were reduced by ¥73 million from the previous interim period despite lower revenue, lowering the budgeted break-even point. - FY2024MitigatedAnnual report
「Selling, general and administrative expenses decreased by 19.0% from the previous fiscal year as a result of thorough budget management based on the expense policy.」
Despite declining revenue, selling, general and administrative expenses were reduced by 19.0% from the previous fiscal year, resulting in operating income and ordinary income turning positive. - FY2024-Q3MitigatedAnnual report
「Meanwhile, during the current fiscal year, the company has applied even stricter budget-versus-actual management based on its expense-use policy than in the previous fiscal year. During the cumulative third quarter, selling, general and administrative expenses decreased by ¥317 million from the same period of the previous year despite higher revenue. The company believes this expense-saving effect will continue throughout the year. Accordingly, the budgeted break-even point has declined for the current fiscal year, creating a structure in which the company can generate profit more readily.」
The company stated that selling, general and administrative expenses were reduced by ¥317 million year on year amid higher revenue, lowering the budgeted break-even point. Measures to address fixed-cost and expense burdens when revenue declines are progressing. - FY2024-Q2MitigatedAnnual report
「During the cumulative second quarter, revenue increased, while expenses were reduced by 20.9% from the same period of the previous year. This expense-saving trend is tracking the budget and will be effective throughout the full fiscal year. Accordingly, the budgeted break-even point has declined for the current fiscal year, creating a structure in which the company can generate profit more readily.」
The company stated that expenses were reduced 20.9% year on year amid higher revenue and that lowering the break-even point advanced measures to address fixed-cost and expense leverage when revenue declines. - FY2024-Q1MitigatedAnnual report
「During the cumulative first quarter, revenue increased, while expenses were reduced by 23.1% from the same period of the previous year. This expense-saving trend is tracking the budget and will be effective throughout the full fiscal year. Accordingly, the budgeted break-even point has declined for the current fiscal year, creating a structure in which the company can generate profit more readily.」
The company stated that expenses were reduced 23.1% year on year despite higher revenue, lowering the budgeted break-even point. Measures to address fixed-cost and expense leverage when revenue declines are progressing. - FY2023MaterialisedAnnual report
「However, the substantial impact of a 16.7% year-on-year decline in revenue caused gross profit to decrease 12.9% year on year. Selling, general and administrative expenses decreased 9.0% year on year as a result of rigorous budget management based on the expense-use policy.」
Although selling, general and administrative expenses were reduced, the decline in revenue lowered gross profit and resulted in an operating loss and an ordinary loss. The earnings structure in which profit deteriorates when revenue declines became evident over the full fiscal year. - FY2023-Q3MaterialisedAnnual report
「In terms of earnings, the return of production volumes to normal levels reduced the cost of sales ratio by 2.1 percentage points from the cumulative period of the same quarter of the previous year. However, the substantial decline in revenue had a significant impact, reducing gross profit by 23.2%. Although the company continued to thoroughly manage selling, general and administrative expenses against the budget based on its expense policy, the impact of lower revenue was substantial, causing the operating and ordinary losses to widen.」
Although the company pursued a lower cost-of-sales ratio and expense controls, the decline in revenue reduced gross profit by 23.2% and widened the operating and ordinary losses. The earnings structure in which profit deteriorates when revenue declines has materialized. - FY2023-Q2MaterialisedAnnual report
「However, the significant decline in revenue resulted in a 26.7% year-on-year decrease in gross profit, and the company posted an operating loss, an ordinary loss, and a net loss.」
The decline in revenue resulted in a 26.7% year-on-year decrease in gross profit and led to an operating loss, an ordinary loss, and a net loss. The earnings structure in which profit deteriorates when revenue declines has materialized. - FY2022MitigatedAnnual report
「Inventory reductions and expense savings have substantially lowered the break-even point, creating a structure in which the company can generate profit more readily going forward.」
Inventory reductions and expense savings have lowered the break-even point, advancing measures to address fixed-cost and expense leverage when revenue declines. - FY2022-Q3MitigatedAnnual report
「Cost reductions and expense savings have lowered the break-even point. Although operating results for the cumulative third quarter were a loss of ¥141 million, the loss narrowed by ¥244 million from the same period of the previous year.」
Cost reductions and expense savings lowered the break-even point and narrowed the operating loss by ¥244 million year on year. Operating results nevertheless remained in the red. - FY2022-Q2MitigatedAnnual report
「Cost reductions and expense savings have lowered the break-even point, resulting in operating income of ¥272 million for the cumulative second quarter. Because fixed costs and other expenses have been reduced, the company has a structure in which it can generate profit more readily, and believes that the effects of cost reductions and expense savings will improve earnings throughout the full fiscal year.」
The company stated that cost reductions and expense savings had lowered the break-even point and resulted in operating income of ¥272 million. Measures to address fixed-cost leverage when revenue declines are progressing. - FY2022-Q1MitigatedAnnual report
「With respect to earnings, cost reductions and expense savings have lowered the break-even point, creating a structure in which the company can generate profit more readily.」
In response to the risk that fixed costs and expenses could pressure profit when revenue declines, the company stated that expense savings had lowered the break-even point. However, losses widened in the first quarter due to an increase in sales promotion expenses. - FY2021-Q3MaterialisedAnnual report
「The cost-of-sales ratio for the cumulative third quarter was 38.5%, compared with 26.1% in the same period of the previous year, and gross profit decreased 27.7%.」
Although the company pursued expense reductions, the cost-of-sales ratio increased due to a larger proportion of purchased products with high costs and variances between budget and actual results for core and regular products, resulting in an operating loss and an ordinary loss. - FY2021-Q2MaterialisedAnnual report
「Selling, general and administrative expenses decreased by 23.6% from the cumulative period of the same quarter of the previous year. However, the cost of sales ratio rose substantially to 35.7% from 23.6% in the cumulative period of the same quarter of the previous year, reflecting an increase in purchased products such as home-use multifunction beauty devices and health foods, as well as lower production volumes at the company's own factory. As a result, the company reported an operating loss and an ordinary loss.」
Despite progress in reducing expenses amid a 24.8% decline in revenue, the increase in the cost-of-sales ratio resulted in an operating loss and an ordinary loss, demonstrating the actual impact of leverage on performance when revenue declines. - FY2019First statedAnnual report
「Our earnings structure is such that changes in revenue have a leveraged effect on profit. If revenue declines sharply and cost and expense controls fail to keep pace, there is a risk that performance will deteriorate.」
The company newly identified deterioration in performance when cost and expense controls fail to keep pace with a sharp decline in revenue as a business and other risk. A substantial decline in revenue, an operating loss and other factors have materialized in the current fiscal year.