Quarterly earnings fluctuations caused by delays in revenue recognition for orders received

「The tatami business continued active sales activities, including online sales of tools and other products for tatami shops, launched toward the end of the previous fiscal year, and the promotion of remote sales. However, sales and earnings remained weak due to the impact of the timing of subsidy payments for approved projects under the “Manufacturing, Commerce and Service Productivity Improvement Subsidy” (Small and Medium Enterprise Agency) and the “Business Restructuring Subsidy” (Small and Medium Enterprise Agency), as well as a decline in the number of approved projects.」

「In the tatami business, the approval rate for applications involving the use of our tatami manufacturing equipment under the “Manufacturing, Commerce and Service Productivity Improvement Subsidy” (Small and Medium Enterprise Agency) and the “Business Restructuring Subsidy” (Small and Medium Enterprise Agency) remained steady, supported by the further development of remote sales activities. However, sales remained weak due to the timing of subsidy payments and a decline in the number of applications.」

「In the Tatami business, the company continued expanding sales activities through remote sales methods and supported tatami stores with applications for the Monozukuri, Commerce and Service Productivity Improvement Subsidy and the Business Restructuring Subsidy, both administered by the Small and Medium Enterprise Agency. Although applications involving the company's equipment were approved steadily, sales were delayed due to the timing of subsidy payments and other factors.」

「Sales were pushed into the consolidated accounting period for the second quarter due to the timing of subsidy disbursements and other factors.」

「Delays in the delivery of supplied components and other materials are affecting the completion and shipping schedules for equipment.」

「Sales of tatami manufacturing equipment to selected subsidy recipients also progressed smoothly.」

「Sales of tatami manufacturing equipment to selected subsidy recipients also progressed smoothly.」

「For the Tatami business, recipients selected in the first round of applications for the Monozukuri, Commerce, and Service Management Capability Improvement Support Subsidy administered by the Small and Medium Enterprise Agency were announced in early June, with results broadly in line with expectations, and orders were received smoothly. However, a considerable number of projects generated sales from July onward due to the timing of subsidy disbursement.」

「The Industrial Equipment business shipped orders received as scheduled, including projects whose shipping dates had slipped from the first quarter.」

「The Industrial Equipment business pursued operations actively despite concerns over US-China trade tensions and other factors, but results fell considerably short of expectations due partly to projects whose shipping dates changed to the second quarter. In the Food Equipment business, demand for labor-saving solutions from major restaurant chains and other customers remained strong, and orders for the core multi-dispenser product progressed smoothly. However, there were few projects generating revenue in the first quarter under review, resulting in a weak start.」

「Recipients were announced at the end of October 2018 and at the end of June 2019, and sales stagnated between application and announcement. After the announcements, however, sales to selected recipients progressed smoothly. In particular, the selection of more than 20 tatami stores was announced at the end of June 2019, triggering a sharp increase in sales of tatami manufacturing equipment, which had previously stagnated.」

「During the cumulative third quarter under review, sales stagnated while the company awaited the results of the subsidy selections.」

「In the Tatami segment, the timing of selecting applicants for the Monozukuri, Commerce, and Service Management Capability Improvement Support Subsidy administered by the Small and Medium Enterprise Agency had a significant impact on the timing of sales of tatami manufacturing equipment. In the first quarter, sales to recipients selected under the fiscal 2017 supplementary budget were made as scheduled. In the second quarter, however, many businesses planned to use subsidies under the fiscal 2018 supplementary budget, for which applications closed on 8 May 2018, and the timing of sales was consequently delayed.」

「The Industrial Equipment segment made progress in receiving orders for projects scheduled to generate revenue during the period as planned. However, many projects were scheduled to generate revenue in the second quarter or later, resulting in a weak start for first-quarter revenue. In the Food Equipment segment as well, demand for labor-saving solutions from major restaurant chains and other customers remained strong and orders progressed smoothly. However, many projects were scheduled to generate revenue in the second quarter or later, resulting in a weak start for first-quarter revenue.」