Improving Margins by Focusing on High-Margin Projects and Recurring Customers

「Although sales to universities and other public research institutions remained sluggish, revenue increased year on year as sales to private-sector companies remained strong. Despite continued rigorous project management, some large projects for universities were won at low gross margins, causing margins to decline. Personnel expenses increased due to the higher headcount, and selling expenses also increased, raising SG&A expenses. However, segment profit increased year on year because of the rise in revenue. Although some large projects had low gross margins, profitability improved as the Company secured a certain margin on other projects, including through passing higher costs on to customers. Despite higher SG&A expenses, segment profit increased year on year on higher revenue and improved margins.」

「Although some large projects had low gross margins, profitability improved as we secured a certain level of margins on other projects by passing through prices and taking other measures.」

「Although universities and other public research institutions performed well, revenue declined year on year as sales to private-sector companies remained sluggish. Profitability improved as the Company continued to pursue rigorous project management and secure a certain margin. Personnel expenses increased due to the higher headcount, and selling expenses also increased, raising SG&A expenses. Despite improved margins, segment profit declined year on year because of the decrease in revenue.」

「In the HPC business, revenue declined as sales to private-sector companies were sluggish and sales fell following the overseas projects won by the Vietnam subsidiary in the previous year, but profit increased as rigorous project management improved margins. In the CTO business, profit increased as sales to both new and recurring customers remained strong.」

「Although import costs continued to trend upward due to the weaker yen, profitability improved through rigorous project management and securing a certain margin. Recruitment eased and selling expenses were reduced, and segment profit increased year on year as a result. Profitability deteriorated and margins declined after the Company responded to higher component prices and cost-reduction requests from some recurring customers. Segment profit declined year on year amid higher SG&A expenses.」

「Sales to universities and other public research institutions and to private-sector companies remained firm. In addition, the Vietnam subsidiary led the acquisition of large overseas projects, and the accumulation of large and medium-sized projects enabled the Company to record a certain level of revenue. In terms of profitability, SG&A expenses continued to trend upward due to the impact of some low-gross-margin large projects for private-sector companies and higher personnel expenses associated with strengthening the workforce, but the business recorded segment profit.」

「Although the Company has been passing on higher import costs resulting from the weaker yen to customers, the pass-through was insufficient and some projects had low margins. SG&A expenses continued to trend upward, partly due to higher personnel expenses associated with strengthening the workforce, but the business recorded segment profit. In terms of profitability, although import costs continued to trend upward as the yen weakened, profitability improved as the Company passed higher costs on to customers and raw material prices stabilized. Segment profit was also supported by the ongoing reduction in selling expenses.」

「Although import costs continued to trend upward as the yen weakened, profitability improved as the Company passed higher costs on to customers and the surge in raw material prices subsided. Segment profit was recorded, helped also by the ongoing reduction in selling expenses.」

「In addition to higher costs resulting from soaring component prices and higher import costs due to the rapid depreciation of the yen, profitability deteriorated because some customers requested cost reductions. As a result, despite higher revenue, gross profit decreased by ¥196.160 million from the previous fiscal year to ¥1,666.732 million.」

「Although sales to universities and other public research institutions remained sluggish, primarily for small projects, the Company recorded revenue from its largest-ever project for a private-sector company, and overall strong sales to private-sector companies enabled it to achieve record revenue for a cumulative quarter period. Margins declined, however, due to soaring raw material prices and higher import costs resulting from the rapid depreciation of the yen. Segment profit declined amid higher SG&A expenses associated with active recruitment to strengthen the organization for achievement of the medium-term management plan. As a result, revenue in the HPC business was ¥5,720.323 million, up 59.9% year on year, and segment profit was ¥166.471 million, down 65.9%. Sales to new customers were generally sluggish, while revenue increased because sales to recurring customers remained strong overall despite differences by sector. However, margins declined due to soaring raw material prices, higher import costs resulting from the weaker yen and deteriorating profitability caused by cost-reduction requests from some customers. Segment profit declined amid higher SG&A expenses, including personnel and travel expenses. As a result, revenue in the CTO business was ¥1,549.704 million, up 9.8% year on year, and segment profit was ¥29.891 million, down 80.1%.」

「Margins declined due to soaring raw material prices, higher import costs resulting from the weaker yen and the reversal of highly profitable large projects from the previous year. Segment losses were recorded amid higher SG&A expenses associated with active recruitment to strengthen the organization for achievement of the medium-term management plan. As a result, revenue in the HPC business was ¥1,147.542 million, down 19.2% year on year, and the segment loss was ¥91.712 million, compared with segment profit of ¥85.323 million in the same quarter of the previous year. Sales to recurring customers remained strong, owing in part to the recovery in amusement equipment, while sales to new customers remained firm. However, margins declined due to soaring raw material prices, higher import costs resulting from the weaker yen and deteriorating profitability caused by cost-reduction requests from some customers. Revenue increased year on year, but the business recorded a segment loss amid higher SG&A expenses associated with the increase in headcount and other factors. As a result, revenue in the CTO business was ¥949.848 million, up 16.3% year on year, and the segment loss was ¥22.662 million, compared with segment profit of ¥52.383 million in the same quarter of the previous year.」

「Although performance remained firm both for public research institutions such as universities and for private-sector companies, profit margins declined because of higher raw material prices, increased import costs resulting from the yen’s depreciation and the reaction to a highly profitable large project in the previous year. Selling, general and administrative expenses also increased because of active hiring to strengthen the organization for achieving the medium-term management plan. Although revenue increased year on year, the Company recorded a segment loss.」

「Although demand from universities and other public research institutions remained sluggish due to the impact of COVID-19 and the reversal of the special demand from the supplementary budget in the previous year, revenue increased year on year as sales to private-sector companies remained strong, driven in part by large projects for deep-learning computers at major companies. The Company actively recruited personnel to strengthen its sales and technical structures in order to achieve its medium-term management plan, and segment profit declined year on year as the resulting increase in headcount raised SG&A expenses.」

「The Company actively recruited personnel to strengthen its sales and technical structures in order to achieve its medium-term management plan, and segment profit declined as the resulting increase in headcount raised SG&A expenses. New projects remained sluggish owing in part to the decline following the large retail-sector project in the previous year, but revenue increased year on year as sales to recurring customers recovered. SG&A expenses increased due in part to the higher headcount, but segment profit increased as revenue rose and margins improved.」

「Margins improved after the Company won highly profitable large projects, but segment profit declined as it actively recruited personnel to achieve its medium-term management plan, increasing SG&A expenses. New projects remained sluggish, but revenue increased year on year as sales to recurring customers recovered. Meanwhile, segment profit declined as SG&A expenses increased due to the higher headcount and increased depreciation and amortization associated with expanded testing and inspection equipment.」

「Revenue increased year on year as new projects remained firm and sales to recurring customers recovered. SG&A expenses increased due in part to the increase in headcount, but segment profit also increased owing to the rise in revenue and other factors, including margin improvement resulting from the higher proportion of sales to profitable recurring customers.」

「Although margins declined as the proportion of recurring customers from whom a certain margin could be expected fell, segment profit increased year on year because of the increase in revenue.」

「Although the spread of COVID-19 led medical institutions that were recurring customers to restrain capital investment and caused shipments for amusement equipment to be pushed back, revenue for the cumulative nine-month period increased year on year, owing to the recovery in sales to semiconductor-related industries and the acquisition of large new projects from major retailers. Margins declined as the proportion of recurring customers from whom a certain margin could be expected fell, but segment profit also increased year on year because of the increase in revenue.」

「However, segment profit declined year on year because the lower proportion of recurring customers from whom a certain margin could be expected also reduced margins. As a result, revenue in the CTO business was ¥810.013 million, up 9.4% year on year, and segment profit was ¥68.756 million, down 7.6%.」

「Margins also declined as the number of profitable projects decreased due to softer customer demand for capital investment, resulting in lower segment profit.」

「As margins improved substantially due in part to an increase in profitable projects in strategic growth areas, gross profit increased by ¥152.643 million from the previous fiscal year to ¥1,550.583 million.」