Deterioration in Earnings Due to Lower Profit Margins on Certain Projects

「Segment profit was ¥407 million, up 8,658.8% from ¥4 million in the previous year, as higher sales, efficiency gains and price pass-through improved the cost ratio.」

「Segment profit was ¥407 million, up 8,658.8% from ¥4 million in the previous year, as higher sales, efficiency gains and price pass-through improved the cost ratio.」

「Segment profit was a loss of ¥77 million, compared with a loss of ¥207 million in the previous interim accounting period. Although efficiency gains and price pass-through progressed, selling, general and administrative expenses increased due to persistently high raw material prices and proactive sales activities and development investment.」

「Despite operating in a challenging business environment, including price competition with competitors, segment profit was ¥4 million (a loss of ¥59 million in the previous year) due to the effect of higher sales.」

「Although the cost ratio improved as a result of efficiency improvements and efforts to pass costs on to customers, segment profit was a loss of ¥207 million (a loss of ¥184 million in the previous interim accounting period) due to lower sales and increased development investment and other expenses.」

「Segment profit was a loss of ¥59 million (a loss of ¥46 million in the previous year), as efforts to improve efficiency and pass costs on to customers were insufficient to fully absorb factors pressuring earnings, including persistently high component costs and higher selling, general and administrative expenses associated with proactive sales activities.」

「In terms of earnings, the segment posted a loss of ¥174 million (a segment loss of ¥157 million in the same quarter of the previous year), as it was unable to offset factors pressuring earnings, such as the higher cost ratio resulting from persistently high component costs, through efficiency improvements and efforts to pass costs on to customers.」

「In terms of earnings, the segment posted a loss of ¥184 million (a segment loss of ¥101 million in the same quarter of the previous year), as the cost burden of fixed expenses increased due to the higher cost ratio resulting from persistently high raw material costs, as well as higher personnel expenses, sales activity costs and other expenses.」

「In the packaging machinery segment, as the impact of COVID-19 subsided, the company conducted active sales activities, including sales visits and exhibiting at trade shows. However, difficult component procurement conditions continued, and revenue was ¥604 million (¥666 million in the same quarter of the previous year, down 9.4%). Segment loss was ¥153 million (segment loss of ¥110 million in the same quarter of the previous year), as the higher cost ratio and increases in personnel expenses, sales activity expenses and other costs increased the fixed-cost burden.」

「In the packaging machinery segment, although orders received were sluggish in some areas as the impact of COVID-19 continued, revenue in the cumulative third-quarter period was ¥3.067 billion (¥2.868 billion in the same quarter of the previous year, up 6.9%), owing to the normalization of sales activities and the effects of exhibiting at trade shows. However, segment loss was ¥157 million (segment loss of ¥52 million in the same quarter of the previous year), as higher component costs, utility expenses and other price increases exerted significant pressure on profit.」

「In the Packaging Machinery segment, the effects of sales visits and exhibiting at trade shows were emerging, but sales for the cumulative second quarter period were ¥1,780 million (¥1,739 million in the same period of the previous year, up 2.4%) because the impact of COVID-19 continued and parts and other items remained difficult to procure. In terms of earnings, the segment posted a loss of ¥101 million (a loss of ¥107 million in the same quarter of the previous year), partly due to higher personnel and sales activity costs.」

「Segment profit was ¥20 million, compared with a loss of ¥15 million in the previous year, as the effect of cost reductions more than offset the increase in selling, general and administrative expenses accompanying the recovery in operating activity.」

「In the packaging machinery segment, although the impact of COVID-19 continued, inquiries increased and orders received recovered, rising 60% year on year, following the resumption of sales activities and trade shows. However, revenue was ¥2.868 billion (¥3.860 billion in the same quarter of the previous year, down 25.7%). Segment loss was ¥52 million (segment profit of ¥33 million in the same quarter of the previous year), although performance improved from the cumulative second-quarter period, as the decline in revenue was compounded by higher sales activity expenses, development costs and other expenses.」

「In the packaging machinery segment, although the impact of COVID-19 continued, inquiries and orders received were trending upward as sales activities and trade shows resumed. However, owing in part to the low carried-forward order backlog at the beginning of the year, revenue was ¥1.739 billion (¥2.104 billion in the same quarter of the previous year, down 17.4%). Segment loss was ¥107 million (segment loss of ¥166 million in the same quarter of the previous year), as the decline in revenue was compounded by higher sales activity expenses, development costs and other expenses.」

「In the packaging machinery segment, although the impact of COVID-19 continued, orders received in the cumulative first-quarter period increased year on year as sales visits and some trade shows resumed. However, owing to the low order backlog at the beginning of the period, revenue was ¥645 million (¥799 million in the same quarter of the previous year, down 19.3%). Segment loss was ¥83 million (segment loss of ¥72 million in the same quarter of the previous year), as the decline in revenue was compounded by higher sales activity expenses and other factors.」

「Segment profit improved from the previous year as the cost burden of developing new large-scale projects declined and selling, general and administrative expenses decreased alongside the reduction in sales activities resulting from the impact of COVID-19. However, the segment still posted a loss of ¥15 million (a loss of ¥47 million in the previous year).」

「In the Packaging Machinery segment, the core packaging machinery business remained sluggish due to continued constraints on sales activities, including the suspension of sales visits and the cancellation or postponement of promotional activities such as trade shows, amid the impact of COVID-19. However, sales from new large-scale projects for specific customers contributed to revenue, bringing sales to ¥3,860 million (¥3,570 million in the same quarter of the previous year, up 8.1%). In terms of earnings, the segment posted profit of ¥33 million (¥164 million in the same quarter of the previous year, down 79.7%), mainly because costs for new large-scale projects increased.」

「In the Packaging Machinery segment, sales of packaging machines for gift-wrapped specialty products remained sluggish due to the impact of COVID-19, while constraints on sales activities continued, including the suspension of sales visits and the cancellation of promotional activities such as trade shows. As a result, sales were ¥2,104 million (¥2,194 million in the same quarter of the previous year, down 4.1%). In terms of earnings, the segment posted a loss of ¥166 million (segment profit of ¥69 million in the same quarter of the previous year), reflecting the decline in sales as well as higher costs, mainly for new large-scale projects.」

「In the Packaging Machinery segment, sales of packaging machines for gift-wrapped specialty products remained sluggish due to the impact of COVID-19. Sales activities were also constrained by the suspension of sales visits and the widespread cancellation of promotional activities such as trade shows. As a result, sales were ¥799 million (¥1,055 million in the same quarter of the previous year, down 24.3%). In terms of earnings, the segment posted a loss of ¥72 million (segment profit of ¥44 million in the same quarter of the previous year), reflecting the decline in sales as well as higher costs for newly developed machines.」

「Increased development costs and the large number of new development projects with low margins put pressure on overall profit in the packaging machinery business, resulting in a segment loss of ¥47 million, compared with a profit of ¥236 million in the same period of the previous year.」

「In terms of profit, in addition to higher sales in both businesses, thorough cost management and improved margins in the production machinery business and other factors resulted in operating profit of ¥585 million, compared with ¥18 million in the same quarter of the previous year.」

「In the Production Machinery segment, business remained strong, centered on large-scale projects, resulting in revenue of ¥3.013 billion (¥1.999 billion in the year-earlier quarter, up 50.7%) and segment profit of ¥393 million (¥212 million in the year-earlier quarter, up 84.6%).」

「In terms of profit, improved margins in the production machinery business and other factors resulted in operating profit of ¥52 million, compared with an operating loss of ¥120 million in the same quarter of the previous year, ordinary profit of ¥99 million, compared with an ordinary loss of ¥72 million, and quarterly net profit of ¥47 million, compared with a quarterly net loss of ¥53 million.」

「In the production machinery segment, orders remained strong, and efforts were made to improve profitability on projects already received,」

「In addition to projects with costs exceeding the initial assumptions, a provision of ¥101 million was recognized in the current quarter for losses expected on loss-making projects among the major projects scheduled to generate sales in the future.」

「In terms of profit, profit growth was limited by costs incurred in the first half for new projects containing development elements, among other factors. Operating profit was ¥53 million, down 11.6% from ¥61 million in the same quarter of the previous year.」

「In terms of profit, the impact of several projects with profit margins below initial expectations was significant, resulting in an operating loss of ¥120 million, compared with an operating loss of ¥70 million in the same quarter of the previous year, an ordinary loss of ¥72 million, compared with an ordinary loss of ¥31 million, and a quarterly net loss of ¥53 million, compared with a quarterly net loss of ¥24 million.」