Soaring Purchased Material Prices and Dependence on Suppliers

「For the main-engine business, the Company passed on higher costs resulting from soaring material prices and worked to control various expenses. As a result, operating profit was ¥824 million, up 34.7% year on year, ordinary profit was ¥954 million, up 39.8%, and net profit was ¥736 million, up 37.2%.」

「In terms of profit and loss, the main-engine business was affected by higher costs resulting from soaring material prices and the failure to make sufficient progress in passing those costs on to customers, while unexpectedly large provisions for order losses were recorded for two-stroke electronically controlled engines, although」

「For 2-cycle electronically controlled engines, particularly electronic equipment, imported materials have become considerably more expensive due to foreign-exchange effects. As a result, we expect cost increases substantially above our assumptions, and this will affect the recognition of a substantial provision for expected contract losses covering all projects, including scheduled shipments from the following fiscal year onward.」

「In terms of earnings, although higher material costs could not be fully passed through to product prices and depreciation expenses increased due to large-scale capital investment, these effects were offset by increased sales of component parts and CMR (casting and metal machining), outside the marine business.」

「In terms of earnings, although higher material costs could not be fully passed through to product prices and depreciation expenses increased due to large-scale capital investment, these effects were offset by increased sales of component parts and CMR (casting and metal machining), outside the marine business.」

「In terms of earnings, the impact of higher material costs could not be fully passed through to product prices, and the increase in depreciation expenses due to large-scale capital investment could not be offset by increased sales in CMR (casting and metal machining), outside the marine business.」

「We expect the challenging order environment to continue for some time, as the impact of soaring costs for various materials has not yet been fully passed through to product prices and production has declined.」

「In the domestic shipping industry, our main market, vessel prices remain high due to continued increases in steel prices, and the number of vessels under construction remains stagnant. …In overseas projects, many shipowners had been taking a wait-and-see approach to assess trends in steel prices and vessel prices, but recently steel prices in both China and South Korea have begun to decline」

「The downward trend in forward orders for main engines and the stagnation in price improvements have yet to turn around. In addition, overseas markets for main engines remain sluggish and raw-material prices are high. Although results in the first quarter were relatively favourable, we expect conditions to become challenging from the second quarter onward.」

「Both domestically and overseas, a substantial increase in the number of vessels under construction cannot be expected because higher steel prices have driven up vessel prices.」

「However, as steelmaking raw materials have become more expensive with the economic recovery, shipyards have been unable to forecast vessel prices and shipbuilding steel prices several years ahead, making it difficult for negotiations on new inquiries to progress.」

「In particular, in light of delays in overseas-procured items that occurred during the pandemic, we are strongly promoting the in-house production of purchased components so that we can respond to disruptions in the supply chain.」

「Although some parties wanted to win new orders even by lowering vessel prices, the situation has become difficult because prices for steel products, including thick steel plate for shipbuilding, have not declined.」

「To address higher material prices, we will thoroughly pursue purchasing initiatives, including overseas procurement, which we have already been advancing, reduce costs through VA and VE, and cut expenses. In addition, we will work diligently to eliminate waste and improve quality by standardising operations.」

「In response to soaring purchase prices and procurement difficulties, we are working to further expand overseas procurement and develop new domestic suppliers.」

「In response to soaring purchase prices and procurement difficulties, we are working to further expand overseas procurement and develop new domestic suppliers.」

「In terms of earnings, component sales increased more than expected, and the effect of higher operating capacity also helped absorb higher costs resulting from rising material prices and increased personnel and other expenses. Operating profit was ¥667 million, up 37.2% year on year, ordinary profit was ¥695 million, up 30.7%, and quarterly net profit was ¥465 million, up 30.6%, resulting in higher revenue and earnings than in the same period of the previous year.」

「In terms of earnings, component sales increased more than expected, and the effect of higher operating capacity also helped absorb higher costs resulting from rising material prices and increased personnel and other expenses. Operating profit was ¥567 million, up 41.9% year on year, ordinary profit was ¥591 million, up 45.7%, and quarterly net profit was ¥396 million, up 45.9%, resulting in higher revenue and earnings than in the same period of the previous year.」

「In terms of earnings, the increase in component sales and the maintenance of operating capacity absorbed higher costs resulting from rising material prices and increased personnel and other expenses. Operating profit was ¥353 million, up 44.4% year on year, ordinary profit was ¥366 million, up 49.7%, and quarterly net profit was ¥248 million, up 48.3%, resulting in higher revenue and earnings than in the same period of the previous year.」

「In terms of earnings, operating capacity was maintained through orders for projects with short delivery times. However, in addition to cost increases due to higher material prices, personnel expenses and other expenses, sales of component parts declined. As a result, operating profit was ¥702 million, down 18.2% from the previous fiscal year; ordinary profit was ¥758 million, down 15.3%; and net income was ¥551 million, down 4.1%. Compared with the previous fiscal year, this represented higher revenue but lower earnings.」

「In terms of earnings, operating capacity was maintained through orders for short-lead-time projects. However, in addition to higher costs resulting from rising material prices and increased personnel and other expenses, sales of components declined. As a result, operating profit was ¥486 million, down 33.2% year on year, ordinary profit was ¥531 million, down 26.1%, and quarterly net profit was ¥356 million, down 21.2%, resulting in higher revenue but lower earnings than in the same period of the previous year.」

「In terms of earnings, operating capacity was maintained through orders for short-lead-time projects. However, in addition to higher costs resulting from rising material prices and increased personnel and other expenses, sales of components declined. As a result, operating profit was ¥400 million, down 27.5% year on year, ordinary profit was ¥406 million, down 27.9%, and quarterly net profit was ¥271 million, down 21.7%, resulting in lower revenue and earnings than in the same period of the previous year.」

「Operating rates were maintained through orders requiring short delivery times. However, in addition to cost increases resulting from higher material prices, labor costs and expenses, spare-parts sales also failed to grow. As a result, operating profit was ¥245 million, down 39.0% year on year, ordinary profit was ¥244 million, down 39.1%, and net profit for the quarter was ¥167 million, down 38.2%, resulting in higher revenue but lower profit compared with the same period of the previous year.」

「The yen has been weakening, and in combination with trends in global resource demand, this could lead to surging prices for purchased materials and affect our business performance. In addition, we depend on specific suppliers for some components, and developments at those suppliers could affect our business performance.」