Addressing Cost Increases Through Appropriate Repricing

「Although we pursued measures including repricing in response to rising raw material prices, projects with long lead times from order receipt through production and shipment continue to require ongoing adjustments. The factors supporting earnings from higher sales exceeded the factors weighing on earnings from rising raw material prices, and the profit margin increased from the previous fiscal year.」

「The company is taking measures such as resetting selling prices in response to rising costs. Although it has also been affected by raw material price increases that outpaced these measures and by higher production costs for certain complex products, profit increased year on year owing to the effect of higher sales.」

「In addition to higher personnel expenses and the loss of large-scale orders in the fire protection and disaster prevention business, the situation in which surging raw material prices continue to outpace repricing in the aerospace and industrial products businesses resulted in lower earnings.」

「In light of surging material prices, the price revisions implemented since the previous fiscal year are also having a certain effect. As a result, the segment operating margin on sales to external customers rose to 12.6%, from 7.5% in the previous fiscal year.」

「Under these circumstances, the Group continued its business activities to contribute to maintaining a secure and safe society by providing products and services that satisfy customers, while addressing issues including reviewing the production structure, improving the cost structure, repricing products and improving work practices. Although the effects of surging raw material prices remained substantial, as in the previous fiscal year, profitability improved significantly, driven by securing revenue and improving the cost ratio through higher plant utilization.」

「Although the effects of higher raw material prices and persistently high energy costs remained substantial, as in the previous fiscal year, gross profit increased significantly, driven by securing revenue and improving the cost ratio through higher plant utilization. Operating expenses also increased with higher sales, but operating income and ordinary income were recorded in the second quarter, compared with losses in the same period of the previous year, as the Company secured a significant level of gross profit and improved profitability.」

「Under these circumstances, the Group continued its business activities to contribute to maintaining a secure and safe society by providing products and services that satisfy customers, while addressing issues including reviewing the production structure, improving the cost structure, repricing products and improving work practices. As a result, revenue was ¥2,124 million, up 72.5% year on year, operating loss was ¥8 million, compared with an operating loss of ¥248 million in the same period of the previous year, ordinary loss was ¥11 million, compared with an ordinary loss of ¥254 million, and net loss attributable to owners of the parent was ¥12 million, compared with a net loss attributable to owners of the parent of ¥184 million.」

「Although the effects of price increases, including repricing, also contributed, the main factor was an increase in orders. In terms of earnings, the cost-of-sales ratio improved from 83.7% in the previous fiscal year to 79.8% in the current fiscal year, owing to the review of the production structure, including the reassignment of personnel continued from the previous fiscal year, higher plant utilization following the recovery in orders in the aerospace and industrial products businesses and the resulting absorption of fixed costs, restrained capital investment, and a reduction in inventories subject to write-downs as profitability recovered.」

「In terms of profit, although the effects of higher raw-material prices and energy costs remained significant, the cost of sales ratio improved year on year and gross profit increased as plant utilisation rose following progress in reviewing the production system and a trend toward recovering orders in the Aerospace and Industrial Products segment.」

「In addition, as we reported a loss in the previous fiscal year, we are currently reviewing our production structure, improving our cost structure and repricing products in an effort to restore profitability at an early stage. Although the effect of these improvements on first-quarter earnings remains limited, we will continue these initiatives.」

「In light of surging resource and material prices, we will review our production structure, improve our cost structure, and pursue appropriate repricing.」