Quarterly earnings fluctuations due to delivery timing, gross margin and one-off losses

「Although companies in Japan and overseas continued to show strong capital investment appetite during the consolidated fiscal year, capital investments above a certain scale have taken longer to complete than before, partly because the arrival of some materials was delayed due to the situation in the Middle East and other factors. Against a backdrop of labor shortages, personnel expenses, including wages and allowances, as well as recruitment-related expenses and various training and education costs, have increased. We are also actively investing in human resources to secure and retain personnel and ensure stable business operations.」

「During the current interim consolidated accounting period, companies in Japan and overseas continued to have strong appetite for capital investment. Although some customers experienced a temporary slowdown due to the impact of the Trump tariffs and other factors, manufacturers' appetite for capital investment gradually recovered over time.」

「During the current interim consolidated accounting period, companies in Japan and overseas continued to have strong appetite for capital investment, and demand continued to exceed supply.」

「Although new capital investment and research and development investment in Japan and overseas have experienced temporary fluctuations, they have continued to expand steadily. With some time lag, the performance of our group, whose business model depends on capital investment and research and development investment, has also remained firm.」

「During the cumulative third quarter of the current consolidated fiscal year, appetite for capital investment in the manufacturing industries in Japan and overseas remained strong. At the same time, component shortages continued, and demand continued to exceed supply.」

「Although new capital investment and research and development investment have experienced temporary fluctuations, the underlying recovery in production has been strong in many industries and has continued to expand at a faster pace than our forecasts. With some time lag, the performance of our group, whose business model depends on capital investment and research and development investment, has recovered to the point where it can be viewed as being on a steady growth trajectory.」

「During the cumulative third quarter of the current consolidated fiscal year, manufacturers' appetite for capital investment remained strong as business conditions recovered from the end of last year. In addition to the resumption of capital investment that had been restrained for 3 years, the semiconductor shortage was gradually easing and overseas travel restrictions were being relaxed, but demand continued to exceed supply.」

「During the cumulative second quarter of the current consolidated fiscal year, manufacturers' appetite for capital investment remained strong. However, shortages of semiconductors and resin continued to have a significant impact across many industries, and rising raw material prices and transportation costs also contributed to an ongoing situation in which demand exceeded supply.」

「During the current consolidated fiscal year, there were strong signs of a recovery in capital investment by large companies. However, the prolonged shortage of semiconductor supplies continued to prevent supply from keeping pace with demand for capital investment.」

「During the second half of the current consolidated fiscal year, signs of a recovery in capital investment by large companies began to emerge. However, shortages of resin caused by a cold wave in North America and semiconductor shortages undermined this recovery, resulting in a situation where supply could not keep pace with demand for capital investment.」

「During the cumulative third quarter of the current consolidated fiscal year, signs of improving investment sentiment were gradually emerging even among customers who had been cautious about capital investment during the COVID-19 pandemic, although we believe that more time is needed for a full recovery.」

「During the cumulative second quarter of the current consolidated fiscal year, some customers remained cautious about capital investment because of the COVID-19 pandemic, and revisions to plans, including investment timing, were observed. For customers in Japan and overseas, production volumes themselves are recovering to almost pre-COVID levels. New capital investment and research and development investment are expected to expand further. We expect the performance of our group, whose business model depends on capital investment and research and development investment, to enter a growth phase with some time lag.」

「Under these circumstances, we have been forced to extend the time frames for ongoing projects. Although customers' appetite for investment is gradually returning, many customers continue to take a very cautious approach to deciding when to invest.」

「Although many customers, both in Japan and overseas, continue to show strong investment appetite, more are taking a cautious view of timing amid the current circumstances. We will monitor these trends closely and take the necessary measures, including strengthening the Group structure, to expand the market for the Group's products.」

「The Intelligent FA Systems business performed steadily, as various inspection systems benefited from increased capital investment using IoT and the water quality testing business launched 2 years ago expanded. However, due in part to shifts in the timing of revenue recognition caused by the buildup of order backlogs, revenue declined and profit increased compared with the same quarter of the prior year.」

「In the Intelligent FA Systems business, the timing of revenue from short-term projects may shift as the scope of orders expands, but current order conditions remain firm. Various inspection systems have continued to perform well amid increased capital investment using IoT, and labor-saving investment driven by labor shortages has also remained strong. In addition, the water quality testing business launched 3 years ago has continued to perform steadily, and the business overall is progressing well.」

「Although there were periods of delays in procuring materials, the effects of the group's One Stop Shopping initiative were becoming increasingly evident. Revenue was ¥1,091 million, down 10.3% year on year, while operating profit was ¥1,040 million, up 31.7%, resulting in lower revenue but higher profit.」

「During the cumulative third quarter of the current consolidated fiscal year, the component equipment and mechatronics businesses, among others, performed particularly strongly, driven by robust production in the scientific analytical equipment and transportation equipment industries, resulting in substantial increases in revenue and profit compared with the same period of the prior year.」

「The Intelligent FA Systems business performed steadily, as various inspection systems benefited from increased capital investment using IoT and the water quality testing business launched 2 years ago expanded rapidly. However, revenue declined and profit increased, partly because the buildup of order backlogs caused significant shifts in the timing of revenue recognition.」

「During the cumulative third quarter of the current consolidated fiscal year, the component equipment and mechatronics businesses, which benefited from the recovery in capital investment and other factors, performed strongly, resulting in higher revenue and profit compared with the same period of the prior year.」

「During the cumulative second quarter of the current consolidated fiscal year, the component equipment and mechatronics businesses performed steadily, but the temporary downturn in the measurement business resulted in only slight increases in both revenue and profit compared with the same period of the prior year.」

「The Intelligent FA Systems business delivered substantial increases in revenue and profit, as various testing machines designed to improve manufacturers' production management capabilities and systems businesses aimed at labor saving and improved production efficiency performed well.」

「Our group has expanded its business by capturing new overseas demand, both directly (through exports) and indirectly (through domestic transactions), amid stagnation caused by shrinking domestic capital investment. On a cumulative basis through the current quarter, although revenue declined slightly, profit increased substantially due to the presence of a large, low-margin solar power-related transaction in the same cumulative period of the prior year, the results of group-wide efforts to improve gross profit margins, the change from a foreign exchange loss in the same cumulative period of the prior year to a foreign exchange gain, and the recognition of gains on sales of fixed assets as extraordinary income, among other factors.」

「The Group has expanded its business by capturing new overseas demand, both directly through exports and indirectly through domestic resale transactions, amid stagnation in transactions caused by shrinking domestic capital investment. On a cumulative basis through the current quarter, revenue declined because of the反動 from the previous year's large, low-margin transactions related to solar power generation and other areas. However, earnings increased owing to a significant improvement in the gross profit margin and factors including the change from foreign exchange losses in the same period of the previous year to foreign exchange gains.」

「Although revenue declined in the quarter partly because it temporarily fell into a lull between deliveries, earnings increased because the gross profit margin improved and one-off loss factors, including foreign exchange losses incurred in the first quarter of the previous fiscal year, became minimal.」