Risk of Delayed Recovery of New Factory Investment and Fixed Asset Impairment
First written in FY2020. 6 of 16 entries say "Mitigated", first in FY2024-Q1. Latest entry: FY2026.
Advanex moved to the "Worse" side of this theme in 2020, 2 years before the typical company in this theme (2022).
The whole theme swung hardest in 2024: 10 of 25 companies on the "Worse" side.
7 other companies' latest entry also says "Mitigated".
- FY2026MitigatedAnnual report
「For 5 asset groups with indications of impairment, for which the need to recognize impairment losses was examined and whose total carrying amount was ¥3,050.082 million, the total undiscounted future cash flows based on the business plans and the net selling price exceeded the carrying amount of the fixed assets in the asset groups, so no impairment loss was recognized.」
The need for impairment was examined for 5 sites with a total carrying amount of ¥3,050.082 million, but no impairment loss was recognized for the current period because the recoverable amount exceeded the carrying amount. - 2026-05-15MitigatedEarnings
「The Company did not record an impairment loss on fixed assets in the current consolidated fiscal year.」
No impairment loss on fixed assets was recorded in the current fiscal year. - FY2025MitigatedAnnual report
「For 6 asset groups with indications of impairment, for which the need to recognize impairment losses was examined and whose total carrying amount was ¥3,128.786 million, the total undiscounted future cash flows based on the business plans and the net selling price were compared with the carrying amount of the fixed assets in the asset groups. Because both the total undiscounted future cash flows and the net selling price exceeded the carrying amount of the fixed assets, no impairment loss was recognized.」
The need for impairment was examined for 6 sites with a total carrying amount of ¥3,128 million, but no impairment loss was recognized for the current period because the recoverable amount exceeded the carrying amount. - FY2024MaterialisedAnnual report
「Because the net selling price of the assets fell below the carrying amount of the fixed assets in the asset groups, our subsidiaries Advanex de Mexico S. de R. L. de C. V. and Advanex (Singapore) Pte. Ltd. reduced the carrying amounts to their recoverable amounts and recognized the decreases as impairment losses under extraordinary losses.」
Impairment losses of ¥95.757 million at the Mexico plant and ¥4.562 million at the Singapore plant, totaling ¥100.319 million, were recognized. The delayed recovery of new plant investments and the risk of impairment of fixed assets materialized at multiple sites. - FY2024-Q3MitigatedAnnual report
「Progress in ramping up automotive and medical production at the US and Mexico plants drove sales up 52.5% year on year to ¥3,182 million. Although the stronger Mexican peso increased fixed costs and other expenses, improved profitability at the US plant narrowed the segment loss to ¥328 million from ¥746 million in the same quarter of the previous year.」
Production ramp-up and earnings improvement progressed in connection with the new plant investment, reducing the Americas segment deficit. - FY2024-Q2MitigatedAnnual report
「Progress in ramping up automotive and medical production at the US and Mexico plants drove sales up 58.0% year on year to ¥2,162 million. Although the stronger Mexican peso increased fixed costs and other expenses, improved profitability at the US plant narrowed the segment loss to ¥163 million from ¥546 million in the same quarter of the previous year.」
Production ramp-up and earnings improvement progressed in connection with the new plant investment, reducing the Americas segment deficit from the same period of the previous year. - FY2024-Q1MitigatedAnnual report
「Progress in ramping up automotive and medical production at the US and Mexico plants drove sales up 53.7% year on year to ¥1,007 million. Although the stronger Mexican peso increased fixed costs and other expenses, profitability improved at both plants, narrowing the segment loss to ¥84 million from ¥283 million in the same quarter of the previous year.」
Regarding new plant investments after the Mexico impairment, production ramp-up and earnings improvement progressed at the United States and Mexico plants, reducing the Americas segment deficit. - FY2023Prospects for new plants turning profitable after the Mexico impairmentAnnual report
「Because the Mexico plant mainly produces automotive products that require a certain period from securing new orders to the start of mass production (sales), the unavoidable time lag between investment and recovery increased the burden of upfront investment and caused operating results to deteriorate. Accordingly, as announced on 12 May 2023, impairment accounting was applied.」
Regarding the delayed recovery of new plant investments and the risk of impairment, the Company reiterated that impairment accounting was applied to the Mexico plant in the previous fiscal year, while indicating that the United States, India and Czech Republic plants were beginning to have prospects for turning profitable. No impairment loss was recognized in the current fiscal year. - FY2023-Q3WorsenedAnnual report
「Despite delays in starting operations at the new Tennessee plant, net sales rose 4.3% year on year to ¥2,087 million, partly due to the weaker yen. The segment loss was ¥746 million, compared with a loss of ¥467 million in the same quarter of the previous year, due in part to the delays at the new Tennessee plant and higher material costs.」
Regarding the new plant investment, delays in starting operations at the Tennessee plant continued, and the Americas segment loss widened year on year. - FY2023-Q1WorsenedAnnual report
「Although operations at the new Tennessee Plant were delayed, progress in ramping up production at the Mexico Plant drove sales up 9.7% year on year to ¥655 million. The segment loss was ¥283 million, compared with a loss of ¥222 million in the same quarter of the previous year, due in part to the delay at the new Tennessee Plant and higher raw material costs.」
Regarding the new plant investment, delays in starting operations at the Tennessee plant were cited as an actual factor contributing to the segment loss. - FY2022MaterialisedAnnual report
「Because the carrying amount of the assets fell below their recoverable amount, our subsidiary Advanex de Mexico S.de R.L.de C.V. recognized an impairment loss as an extraordinary loss.」
Regarding the delayed recovery of new plant investments and the risk of impairment of fixed assets, the recoverable amount of production equipment at the Mexican subsidiary fell below its carrying amount, and an impairment loss of ¥38.191 million was recognized. - FY2021WorsenedAnnual report
「On the other hand, because these new plants mainly produce automotive products that take several years from securing new orders to the start of mass production (sales), the unavoidable time lag between investment and recovery has increased the burden of upfront investment. Operating results have deteriorated in recent years, and the risk of impairment of fixed assets has emerged.」
It has been explicitly stated that the recovery of new plant investments takes time, resulting in the burden of upfront investment and the risk of impairment of fixed assets. No impairment loss was recognized for 7 sites because future cash flows were expected to exceed their carrying amounts. - FY2021-Q3RestatedAnnual report
「Despite the above effects, we have made accounting estimates, including impairment losses on fixed assets, on the assumption that recovery will progress during the current fiscal year. This assumption is highly uncertain, and if the effects persist for an extended period, losses may arise in the future.」
The policy of estimating impairment losses on fixed assets and other items on the assumption of recovery during the current fiscal year, based on declining production and sales due to COVID-19, remains in place. The uncertainty and possibility of losses if the effects persist have also been reiterated. - FY2021-Q2SoftenedAnnual report
「Despite the above effects, we have made accounting estimates, including impairment losses on fixed assets, on the assumption that recovery will progress during the current fiscal year. This assumption is highly uncertain, and if the effects persist for an extended period, losses may arise in the future.」
While assuming that production and sales will decline due to major customers suspending operations, the recovery timing is stated as “during the current fiscal year” rather than “from the second quarter.” The disclosure continues to state that uncertainty is high and that losses may arise if the effects persist. - FY2021-Q1WorsenedAnnual report
「Despite the above effects, we have made accounting estimates, including impairment losses on fixed assets, on the assumption that recovery will progress from the second quarter of the current fiscal year. This assumption is highly uncertain, and if the effects persist for an extended period, losses may arise in the future.」
Estimates, including impairment losses on fixed assets, are based on the assumption that major customers suspend operations and production and sales decline due to the impact of COVID-19. While recovery from the second quarter is assumed, the assumption is highly uncertain, and the possibility of losses if the effects persist has been explicitly stated. - FY2020First statedAnnual report
「The Group has 5 production sites in Japan and 15 overseas, each holding substantial fixed assets, including property, plant and equipment, software and goodwill. Because automotive products take several years from securing new orders to the start of mass production (sales), if profitability falls below the initial plan due to changes in the business environment or other factors and recovery of the investment becomes unlikely, the carrying amount must be reduced and the decrease recognized as an impairment loss. This could adversely affect the Group's operating results and financial position.」
Against the backdrop of fixed assets at 5 domestic and 15 overseas production sites and the fact that automotive investments take several years to recover, the risk of impairment when profitability declines has been disclosed for the first time as a standalone major risk.