Margin Decline Due to Low-Margin Overseas Projects

「売上高の大幅な減少に加え、売上総利益率の低下（37.5％→27.9％）と販売費及び一般管理費の増加により、営業損失１億４百万円（前年同期は１千１百万円の営業利益）となりました。」

「In North and Central America, sales remained solid, particularly to the automotive industry, due to the increase in orders in the previous consolidated fiscal year, and net sales increased by ¥303 million, or 85.0%, year on year to ¥660 million. In terms of earnings, gross margin declined from 36.1% to 25.6%, mainly due to higher repair costs for defects arising after delivery, and selling, general and administrative expenses also increased, resulting in an operating loss of ¥68 million.」

「海外案件にて納入後の不具合対応により修正計画比で減益」

「In the Japan segment, gross margin deteriorated by 1.6 percentage points from 24.0% in the prior year to 22.4% in the current year, due to persistently high resource prices and changes in the product mix accompanying the increase in large orders.」

「In Japan, the gross profit margin deteriorated from 24.5% to 21.0% due to rising resource prices and changes in the product mix associated with an increase in large-scale orders. Although selling, general and administrative expenses also increased, operating profit rose by ¥213 million year on year, or 99.5%, to ¥427 million, as the increase in gross profit resulting from higher sales more than offset these factors.」

「In Japan, despite efforts to reduce costs, primarily material costs, gross margin deteriorated by 0.8 percentage points from 27.0% in the prior year to 26.2% in the current year due to lower net sales. In East Asia, gross margin improved by 4.0 percentage points from 20.9% to 24.9%, due mainly to higher net sales and efforts to reduce manufacturing expenses. In Southeast Asia, gross margin improved by 3.0 percentage points from 29.5% to 32.5% due to higher net sales. In North and Central America, gross margin deteriorated by 4.0 percentage points from 33.1% to 29.1%, as higher variable expenses outweighed the increase in net sales.」

「In Japan, net sales increased by ¥969 million, or 12.2%, year on year to ¥8.889 billion, due in part to continued solid orders related to lithium-ion batteries for electric vehicles (EVs). In terms of earnings, gross margin deteriorated from 27.3% to 23.9%, partly because of surging resource prices, and this was insufficient to absorb the increase in selling, general and administrative expenses. Operating profit decreased by ¥165 million, or 30.1%, to ¥385 million, while segment profit (ordinary profit) decreased by ¥22 million, or 3.5%, to ¥636 million. In East Asia, orders related to lithium-ion batteries for EVs and lenses for smartphones and VR applications remained solid, but this was insufficient to offset the decline in sales during the more than 2-month suspension of factory operations due to the Shanghai lockdown. Net sales decreased by ¥695 million, or 14.8%, to ¥3.999 billion. In Southeast Asia, capital investment was generally recovering, although the pace of economic recovery varied by country, and net sales increased by ¥123 million, or 9.8%, to ¥1.390 billion. In terms of earnings, although gross margin improved from 32.2% to 35.6%, this was insufficient to absorb the increase in selling, general and administrative expenses. Operating loss was ¥5 million, compared with operating profit of ¥12 million in the prior-year period, and segment loss (ordinary loss) was ¥1 million, compared with ordinary profit of ¥19 million. In North and Central America, demand centered on the automotive industry was recovering in Central America, but capital investment had not yet recovered. Net sales decreased by ¥51 million, or 30.6%, to ¥116 million. In terms of earnings, operating loss was ¥99 million, compared with ¥52 million in the prior-year period, and segment loss (ordinary loss) was ¥58 million, compared with ordinary loss of ¥53 million, mainly because of lower gross profit accompanying the decline in net sales.」

「In Japan, capital investment in manufacturing continued to recover gradually, and orders remained solid, primarily for daily-use goods, containers and logistics-related products, new materials and food-sheet products. However, due in part to longer delivery times caused by semiconductor shortages, net sales increased by only ¥27 million, or 1.1%, year on year to ¥2.531 billion. In terms of earnings, gross margin was broadly flat at 26.0% compared with 25.9%, but this was insufficient to absorb the increase in selling, general and administrative expenses. Operating profit therefore decreased by ¥44 million, or 32.6%, to ¥91 million, while segment profit (ordinary profit) increased by ¥217 million, or 141.9%, to ¥371 million due to the recognition of foreign exchange gains and other factors.」

「In Japan, despite efforts to reduce costs, primarily material costs, gross margin deteriorated by 0.8 percentage points from 27.0% in the prior year to 26.2% in the current year due to lower net sales. In East Asia, gross margin improved by 4.0 percentage points from 20.9% to 24.9%, due mainly to higher net sales and efforts to reduce manufacturing expenses. In Southeast Asia, gross margin improved by 3.0 percentage points from 29.5% to 32.5% due to higher net sales. In North and Central America, gross margin deteriorated by 4.0 percentage points from 33.1% to 29.1%, as higher variable expenses outweighed the increase in net sales.」

「Gross margin improved in North and Central America from 30.8% in the prior year to 33.1% in the current year, an improvement of 2.3 percentage points, as the company worked to reduce costs, primarily material costs, and cut variable expenses in all segments. However, in the other segments these efforts did not fully offset the increase in unit manufacturing fixed costs accompanying lower capacity utilization. Gross margin therefore declined slightly in Japan, from 28.0% to 27.0%, and declined by 5.6 percentage points in East Asia, from 26.5% to 20.9%, and by 3.9 percentage points in Southeast Asia, from 33.4% to 29.5%.」

「Although net sales declined in the Japan segment, gross margin improved by 0.2 percentage points, from 27.8% in the prior year to 28.0% in the current year, mainly because of efforts to reduce costs, particularly material costs.」

「In Japan, net sales increased by ¥2.069 billion, or 15.7%, year on year to ¥15.214 billion, due mainly to solid capital investment in manufacturing, including the automotive industry. In terms of earnings, operating profit increased by ¥727 million, or 77.4%, to ¥1.666 billion, driven by higher gross profit accompanying the increase in net sales and an improvement in gross margin from 25.8% to 27.8%, reflecting efforts to reduce costs, primarily material costs.」

「In Japan, capital investment in manufacturing, including the automotive industry, recovered, and net sales increased by ¥1.424 billion, or 23.9%, year on year to ¥7.387 billion. In terms of earnings, operating profit increased by ¥408 million, or 105.5%, to ¥795 million, and segment profit (ordinary profit) increased by ¥446 million, or 111.1%, to ¥849 million, mainly because of higher gross profit accompanying the increase in net sales and an improvement in gross margin from 25.5% to 26.9%.」

「Gross margin was broadly flat, at 29.7% in the current year compared with 29.4% in the prior year. Gross margin in the Japan segment deteriorated by 1.6 percentage points year on year, but the company believes it can improve going forward, partly because of the strategic acceptance of large projects in growth areas.」

「In Japan, orders received and the order backlog have remained above the prior-year period, and net sales increased by ¥1.236 billion, or 14.9%, year on year to ¥9.510 billion. In terms of earnings, gross margin declined to 25.9% from 28.3%, mainly because of changes in the sales mix in the non-consolidated business, including a lower proportion of standard machines and a higher proportion of products procured from production subsidiaries, primarily for overseas projects, and higher installation costs for domestic projects. However, operating profit increased by ¥65 million, or 9.6%, year on year to ¥742 million, reflecting higher gross profit accompanying the increase in net sales and other factors.」

「In Japan, orders received and the order backlog have remained above the prior-year period, and net sales increased by ¥300 million, or 5.3%, year on year to ¥5.962 billion. In terms of earnings, gross margin declined mainly because of changes in the sales mix in the non-consolidated business, including a lower proportion of standard machines and a higher proportion of products procured from production subsidiaries, primarily for overseas projects, as well as higher installation costs for domestic projects. Operating profit decreased by ¥69 million, or 15.1%, year on year to ¥386 million, while segment profit (ordinary profit) decreased by ¥90 million, or 18.4%, to ¥402 million.」

「In terms of earnings, we worked to reduce costs, primarily material costs, and cut various expenses. However, gross margin declined due in part to the impact of overseas projects in Japan with tight margins, resulting in operating profit of ¥103 million, down ¥116 million year on year, or 53.1%, and ordinary profit of ¥85 million, down ¥87 million, or 50.5%.」