Unprofitable Projects and Nonconformity to Contract
First written in FY2022. 6 of 15 entries say "Worsened", first in FY2024-Q1. Latest entry: FY2026-H1.
The whole theme swung hardest in 2024: 17 of 54 companies on the "Worse" side.
12 other companies' latest entry also says "Worsened".
- FY2026-H1WorsenedAnnual report
「Provision for contract losses 23,818 25,592」
The provision for contract losses increased from ¥23,818 thousand at the prior fiscal year-end to ¥25,592 thousand at the end of the six-month period, indicating higher recognized expected losses on unprofitable projects. - FY2025WorsenedAnnual report
「At the end of the fiscal year, we record a provision for contract losses for expected losses arising in the following fiscal year or later when future losses are expected and can be reasonably estimated.」
The provision for contract losses increased from ¥5,351 thousand at the prior fiscal year-end to ¥23,818 thousand, indicating increased expected future losses on unprofitable projects. - FY2025-H1WorsenedAnnual report
「For systems integration, although delays in certain processes of an unprofitable project and recovery measures affected revenue, other projects progressed generally smoothly against the initial plan. Revenue was ¥3,237,840 thousand, up 6.0% year on year. Gross profit was ¥596,024 thousand, down 12.4% year on year, due to development costs, including personnel and outsourcing costs, exceeding the initial plan as a result of prioritizing the unprofitable project described above. Provision for contract losses 5,351 45,707」
Recovery measures for process delays and development costs exceeding the initial plan arose on an unprofitable project, reducing gross profit 12.4% year on year. The provision for contract losses increased from ¥5,351 thousand at the prior fiscal year-end to ¥45,707 thousand. - FY2024WorsenedAnnual report
「Following costs exceeding expectations in certain projects during the fiscal year ended December 2024, we again reviewed and detailed the monitoring items and launched a “Project Risk Management Group” to strengthen risk-management functions.」
Development costs exceeding expectations actually arose in certain projects, and the provision for contract losses increased from ¥92 thousand to ¥5,351 thousand. - FY2024-H1MaterialisedAnnual report
「Operating profit was ¥206,913 thousand, down 13.6% year on year, due to development costs exceeding expectations in certain processes of long-term projects and the commencement of advance development on certain projects. Provision for contract losses 92 10,164」
Development costs exceeding expectations actually arose in certain processes of long-term projects, reducing operating profit 13.6% year on year. The provision for contract losses increased from ¥92 thousand at December 2023 to ¥10,164 thousand at June 2024. - FY2024-Q1WorsenedAnnual report
「Provision for contract losses 92 2,280」
The provision for contract losses increased from ¥92 thousand at December 2023 to ¥2,280 thousand at March 2024, reversing the prior downward trend and indicating a higher accounting provision for expected losses on unprofitable projects. - FY2023MitigatedAnnual report
「Provision for contract losses 325 92」
The provision for contract losses decreased from ¥325 thousand at the prior fiscal year-end to ¥92 thousand, also declining from ¥15,323 thousand at the end of the second quarter and ¥9,740 thousand at the end of the third quarter. - FY2023-Q3Decrease in the provision for losses on ordersAnnual report
「Provision for contract losses 325 9,740」
The provision for contract losses decreased from ¥325 thousand at the prior fiscal year-end to ¥9,740 thousand. It also declined from ¥15,323 thousand at the end of the second quarter, although the report does not explain the reason or provide details of individual projects. - FY2023-Q2MaterialisedAnnual report
「Provision for contract losses 325 15,323」
The provision for contract losses increased from ¥325 thousand at the prior fiscal year-end to ¥15,323 thousand at the end of the six-month period, recognizing accounting losses expected on unprofitable projects. The report does not explain individual projects or causes. - FY2022First statedAnnual report
「If additional requirements arise after a project begins, work or delivery is delayed due to our fault, or the content, type, quantity or quality of completed deliverables fails to conform to the contract, this could affect our business performance and financial position through reductions in contract amounts, additional costs exceeding the original estimate, delay damages or suspension of ongoing transactions due to a loss of trust.」
The likelihood is assessed as low and the impact as medium. An independent project-management department is identified as a response measure.