Low Initial Utilization of the Newly Established Line and Fixed-Cost Burden
First written in FY2016-Q2. 20 of 34 entries say "Worsened", first in FY2017-Q1. Latest entry: FY2027-H1.
W-Scope moved to the "Worse" side of this theme in 2017, 3 years before the typical company in this theme (2020).
The whole theme swung hardest in 2019: 7 of 14 companies on the "Worse" side.
11 other companies' latest entry also says "Mitigated".
- FY2027-H1MitigatedAnnual report
「Although raw material costs increased by ¥50 million and utilities expenses by ¥88 million due to higher sales volumes and other factors, personnel expenses declined by ¥63 million and depreciation by ¥43 million, mainly as a result of cost reductions in manufacturing costs. Inventory valuation losses also declined by ¥448 million, among other factors, improving operating results.」
Although raw material costs and utilities expenses increased, lower personnel expenses and depreciation resulting from cost reductions, together with lower inventory valuation losses, improved the operating loss by ¥1,480 million year on year. - FY2026WorsenedAnnual report
「The main factor was the inability to cover fixed costs and other expenses because of the decline in sales.」
Although expenses declined due to the deconsolidation of WCP and other factors, lower sales prevented the absorption of fixed costs and other expenses, resulting in a gross loss of ¥3,974 million and an operating loss of ¥4,919 million. - FY2026-H1MitigatedAnnual report
「Operating profit declined as revenue fell, with raw material costs down ¥4,584 million, utilities expenses down ¥2,946 million, depreciation down ¥3,474 million and personnel expenses down ¥4,389 million. This reflected restrained production following lower separator shipment volumes due to weaker battery demand, as well as lower variable and fixed costs following the deconsolidation of WCP and other factors.」
Variable and fixed costs, including raw material costs, utilities expenses, depreciation and personnel expenses, declined as production was restrained due to lower battery demand and WCP was deconsolidated. - FY2025MitigatedAnnual report
「As a result, raw material costs declined by ¥3,726 million, utilities expenses by ¥2,576 million, depreciation by ¥2,504 million and personnel expenses by ¥2,380 million.」
The cost burden from raw material costs, utilities expenses, depreciation, personnel expenses and other items declined year on year due to lower sales volumes and the deconsolidation of WCP. However, the operating loss continued. - FY2025-H1WorsenedAnnual report
「Raw material costs increased by ¥656 million, depreciation by ¥651 million and personnel expenses by ¥1,149 million as sales volumes increased. Freight costs increased by ¥382 million year on year to ¥1,295 million because disruptions to maritime transport in the Middle East raised ocean freight rates to Hungary and made it necessary to ship some products by air. In addition, cost of sales increased by ¥2,673 million year on year because production volumes were restrained and inventory was drawn down in anticipation of lower future shipment volumes for certain models. As a result, costs related to cost of sales and other items increased by a total of ¥6,702 million year on year.」
The cost burden increased, including raw material costs of ¥656 million, depreciation of ¥651 million, personnel expenses of ¥1,149 million, freight costs of ¥382 million and ¥2,673 million in cost of sales from inventory drawdowns. Costs related to cost of sales and other items increased by ¥6,702 million year on year. - FY2024-Q2WorsenedAnnual report
「The main costs that increased during the quarter were raw material costs of ¥369 million, personnel expenses of ¥413 million and depreciation of ¥264 million. Freight costs increased by ¥160 million year on year because disruptions to maritime transport in the Middle East raised ocean freight rates to Hungary and made it necessary to ship some products by air. In addition, cost of sales increased by ¥1,567 million year on year because inventory was drawn down for certain models to meet higher sales volumes.」
In addition to higher raw material costs, personnel expenses and depreciation associated with increased sales volumes, freight costs rose due to disruptions to maritime transport and cost of sales increased as inventory was drawn down, expanding the burden of fixed and variable costs. - FY2024WorsenedAnnual report
「Raw material costs of ¥846 million, depreciation of ¥527 million, personnel expenses of ¥1,056 million and other costs related to cost of sales increased by ¥6,527 million year on year as sales volumes increased.」
The operating margin declined from 17.4% to 8.0% due to higher raw material costs, depreciation, personnel expenses and other costs associated with increased sales volumes. - FY2023-Q1RestatedAnnual report
「With respect to operating profit, sales increased by ¥2,625 million year on year, while costs related to cost of sales and other items increased by ¥1,808 million year on year, including raw material costs of ¥303 million, depreciation of ¥144 million and personnel expenses of ¥487 million, as sales volumes increased.」
Although raw material costs, depreciation, personnel expenses and other costs continued to weigh on results as sales volumes increased, operating profit improved year on year. - FY2022MitigatedAnnual report
「The main factor was a decline in manufacturing cost per unit resulting from higher sales and production volumes.」
The disclosure states that higher production and sales volumes lowered manufacturing cost per unit and enabled greater absorption of the fixed-cost burden associated with the newly established lines. - FY2021MitigatedAnnual report
「The main factor was a decline in manufacturing cost per unit resulting from higher sales and production volumes.」
Although the fixed-cost burden associated with the newly established lines and other facilities continues, higher sales and production volumes lowered manufacturing cost per unit and contributed to improved operating results. - FY2021-Q3RestatedAnnual report
「Operating profit recovered substantially as sales increased. However, production volumes were insufficient because approval procedures for the newly established manufacturing line had been delayed, causing the production optimization plan to fall behind by several months, and profit improvement was therefore also slightly delayed.」
The disclosure continues to describe a situation in which delays in the approval procedures for the newly established line have delayed production optimization and profit improvement by several months. - FY2021-Q2WorsenedAnnual report
「Operating profit recovered substantially as sales increased. However, profit improvement has been slightly delayed due to the impact of insufficient production volumes, as prototyping of new products increased in preparation for medium-term expansion of automotive battery production and the production optimization plan associated with the operation of the newly established line fell behind schedule.」
Production volumes were insufficient because of increased prototyping of new products and delays in the production optimization plan for the newly established line, resulting in a delay in profit improvement despite higher sales. - FY2021-Q1MitigatedAnnual report
「In addition, the Company recorded an inventory valuation loss of ¥296 million on certain products, freight costs increased by ¥132 million year on year due to the need to secure shipping vessels, and cost of sales increased by ¥440 million year on year due to changes in product inventories. As a result, operating profit improved by ¥527 million year on year to ¥162 million, compared with an operating loss of ¥365 million in the same period of the previous year.」
Although raw material costs, personnel expenses and other costs, as well as inventory valuation losses, were incurred, depreciation declined by ¥87 million year on year, and operating results improved from a loss in the same period of the previous year to an operating profit of ¥162 million. - FY2020WorsenedAnnual report
「For the full fiscal year, although sales increased substantially year on year and development costs fell by ¥521 million with the start of mass production for EV projects, depreciation, personnel expenses and other costs increased as production scaled up. In addition, the decline in factory utilization caused by the global slowdown in production activity during the COVID-19 pandemic was a major factor behind the deterioration in the cost of sales ratio, resulting in an operating loss.」
Although sales increased and development costs declined, higher fixed costs from expanded production capacity and low utilization caused by the COVID-19 pandemic led to a deterioration in the cost of sales ratio and an operating loss. - FY2020-Q3WorsenedAnnual report
「Although revenue increased by ¥3,023 million, expenses rose by ¥1,351 million for depreciation as investment in production lines continued, by ¥621 million for personnel expenses as staffing increased with production expansion, and by ¥1,573 million for other expenses.」
Despite higher revenue, depreciation of ¥1,351 million from investment in production lines, personnel expenses of ¥621 million and other expenses of ¥1,573 million continued to increase, expanding the fixed-cost burden. - FY2020-Q2RestatedAnnual report
「In addition to higher revenue, costs increased as continued investment in production lines resulted in an approximately ¥948 million increase in depreciation, while additional hiring to expand production capacity increased personnel expenses by approximately ¥543 million.」
Depreciation of approximately ¥948 million associated with investment in production lines and personnel expenses of approximately ¥543 million resulting from increased staffing continued to rise, and the company continued to report the fixed-cost burden associated with new lines and expanded production capacity. - FY2020-Q1WorsenedAnnual report
「Investment in production lines increased depreciation by ¥538 million, while additional hiring to expand production capacity increased personnel expenses by ¥305 million. Research and development expenses decreased by ¥269 million as a result of the start of mass production for automotive batteries and other factors. In addition, lower manufacturing fixed costs per unit as production volumes expanded and other factors improved the operating loss by ¥951 million year on year, to ¥365 million, compared with an operating loss of ¥1,316 million in the same period of the previous year.」
Depreciation of ¥538 million and personnel expenses of ¥305 million increased, and the fixed-cost burden continued. However, the operating loss improved as the start of mass production and higher output reduced the burden. - FY2019WorsenedAnnual report
「The increase in revenue contributed to a ¥2.5 billion increase in profit. However, continued investment in production lines resulted in an approximately ¥1.5 billion increase in depreciation, while the number of employees grew approximately 1.6-fold over the year to expand production capacity, increasing personnel expenses by approximately ¥1.8 billion year on year.」
Depreciation associated with investment in production lines increased by approximately ¥1.5 billion and personnel expenses by approximately ¥1.8 billion, expanding the fixed-cost burden. - FY2019-Q3WorsenedAnnual report
「Although revenue increased substantially year on year, capital investment and hiring continued in preparation for future demand growth. As a result, depreciation increased by approximately ¥600 million, personnel expenses by approximately ¥1.2 billion, and development and sample expenses by ¥34 million year on year, resulting in an operating loss of ¥3,211 million, compared with an operating loss of ¥1,736 million in the same quarter of the previous year.」
Continued capital investment and hiring led to increases of approximately ¥600 million in depreciation, ¥1.2 billion in personnel expenses and ¥34 million in development and sample expenses, expanding the operating loss from ¥1,736 million in the same period of the previous year to ¥3,211 million. - FY2019-Q2WorsenedAnnual report
「Research and development expenses increased by approximately ¥400 million year on year because additional line certification was brought forward in preparation for a sharp increase in supply volumes for EV projects from the second half of this year. Personnel expenses increased by approximately ¥700 million due to additional hiring for higher production, and depreciation increased by approximately ¥500 million as capital investment continued in preparation for higher demand from major customers. As a result, the operating loss increased to ¥2,415 million, compared with an operating loss of ¥875 million in the same quarter of the previous year.」
The early certification of additional lines, increased staffing and capital investment led to increases of approximately ¥400 million in research and development expenses, ¥700 million in personnel expenses and ¥500 million in depreciation, expanding the operating loss from ¥875 million in the same period of the previous year to ¥2,415 million. - FY2019-Q1WorsenedAnnual report
「Research and development expenses for samples and line-operation costs for approval of transportation-equipment projects that had continued since the previous year increased by approximately ¥300 million year on year. Personnel expenses increased by approximately ¥300 million, depreciation by approximately ¥200 million and other fixed costs by approximately ¥300 million, resulting in an operating loss of ¥1,316 million, compared with an operating loss of ¥172 million in the same quarter of the previous year.」
Higher sample and line-approval costs for transportation-equipment projects, personnel expenses, depreciation and other fixed costs expanded the operating loss from ¥172 million in the same period of the previous year to ¥1,316 million. - FY2018WorsenedAnnual report
「Operating profit declined by approximately ¥500 million year on year as a result of lower revenue. As investment in production lines continued, depreciation increased by approximately ¥1 billion and personnel expenses by approximately ¥200 million year on year. In addition, research and development expenses increased substantially, by approximately ¥2 billion year on year, as the company focused on product development and sample prototyping to rapidly ramp up new EV projects.」
In addition to lower revenue, increases of approximately ¥1 billion in depreciation, ¥200 million in personnel expenses and ¥2 billion in research and development expenses expanded the operating loss. - FY2018-Q3RestatedAnnual report
「Operating profit was affected by higher fixed costs such as depreciation as the company continued to expand its film-forming and coating lines. In addition, W-SCOPE KOREA CO., LTD. and the newly operational W-SCOPE CHUNGJU PLANT CO., LTD. (WCP) incurred higher expenses as shipments of samples for technical evaluation and specification approval increased for projects targeting mass-production sales from the following fiscal year onward.」
Higher fixed costs from the expansion of film-forming and coating lines and higher expenses associated with technical evaluations and approval-sample shipments at WCP and elsewhere in preparation for mass-production sales continue. - FY2018-Q2WorsenedAnnual report
「Although capital investment was advanced in preparation for expanding EV demand from the second half of 2019, with 4 film-forming lines and 2 coating lines beginning operations over the year and increasing fixed costs such as depreciation, production also began at the second manufacturing subsidiary, W-SCOPE CHUNGJU PLANT CO., LTD. This generated operating expenses and start-up costs for the new company. In addition, production of samples for line approval by major customers continued, while lower orders from the Chinese and Japanese markets had a significant impact, resulting in a substantial year-on-year decline in operating profit.」
Fixed costs such as depreciation associated with the operation of film-forming and coating lines, WCP's operating and start-up costs, and expenses for producing approval samples were incurred. Lower orders from the Chinese and Japanese markets also contributed, substantially weighing on operating profit. - FY2018-Q1WorsenedAnnual report
「Operating profit was affected by higher depreciation, personnel and other expenses and costs associated with ramping up production at the new manufacturing subsidiary W-SCOPE CHUNGJU PLANT CO., LTD. (WCP). Higher production costs resulting from the Korean won's appreciation against the yen also contributed, resulting in an operating loss.」
The burden from depreciation, personnel expenses and WCP's production ramp-up costs continued, while higher costs resulting from the Korean won's appreciation also contributed to an operating loss. - FY2017WorsenedAnnual report
「Research and development expenses increased by ¥84 million from the previous fiscal year to ¥262 million as a result of developing new applications, including filters for industrial water treatment. Other expenses also rose substantially, including costs to improve the manufacturing environment at the company's manufacturing subsidiary W-SCOPE KOREA CO., LTD., increased shipments of large volumes of samples for batteries used in EV and PHEV applications, for which mass production is expected to accelerate from the second half of fiscal 2018, and higher variable costs associated with ramping up production on the No. 8 and No. 9 large lines installed from the third quarter.」
Variable costs associated with ramping up the new lines, manufacturing-environment improvement expenses, large-volume sample shipments and research and development expenses combined to substantially compress operating profit. - FY2017-Q3WorsenedAnnual report
「Operating profit fell substantially year on year due to higher costs including (1) innovation expenses for production lines and the plant, (2) increased sample shipments for new customers, (3) upfront hiring associated with the ramp-up of mass production at the new manufacturing subsidiary WCP from the first half of fiscal 2018, and (4) variable costs and other expenses associated with preparations for the start of mass production on the No. 8 line, in addition to the factors that affected the second quarter.」
In addition to the burden from expanded lines, plant innovation expenses, sample shipments, upfront hiring at WCP and preparations for mass production on the No. 8 line combined to weigh on operating profit. - FY2017-Q2WorsenedAnnual report
「In addition to higher depreciation expenses for the expanded production lines, upfront hiring expenses and increased sample shipments also contributed to a substantial year-on-year decline in operating profit.」
In addition to depreciation expenses for the expanded production lines, upfront hiring expenses and increased sample shipments combined to cause a substantial year-on-year decline in operating profit. - FY2017-Q1WorsenedAnnual report
「Operating profit was compressed by higher depreciation expenses for Production Lines 5 through 7 added the previous year, higher expenses from hiring personnel ahead of facility expansion planned for the second half of the current year, and increased cost of sales due in part to the appreciation of the South Korean won against the yen.」
In addition to the depreciation burden from the new lines, upfront hiring expenses for the expansion of facilities were incurred, compressing operating profit. - FY2016RestatedAnnual report
「The operation of the No. 10 and No. 11 lines, for which capital investment was recently approved, is expected in the fiscal year ending December 2018, and the company expects to incur upfront costs and other expenses.」
The company states that upfront costs and other expenses associated with the operation of new lines are also expected for the future No. 10 and No. 11 lines. - FY2016-Q3RestatedAnnual report
「Although operating profit was affected by (1) higher initial costs and fixed-cost burdens associated with the operation of new lines and (2) increased sample production for expanding the range of models adopted from the next fiscal year onward, the operating margin rose year on year as a result of improved production efficiency on existing lines.」
Higher initial costs and fixed-cost burdens associated with the operation of new lines continue to be incurred. - FY2016-Q2First statedAnnual report
「The decline in initial utilization and increase in the fixed-cost burden associated with the operation of the No. 6 and No. 7 lines proceeded as expected.」
The earnings burden associated with the operation of the new lines has materialized, but the company considers it to be in line with expectations.