Excessive Capital Investment and Investment Recovery Risk
First written in FY2020. 1 of 3 entries say "Mitigated", first in FY2021. Latest entry: FY2026.
Nippi moved to the "Worse" side of this theme in 2026, 4 years after the typical company in this theme (2022).
The whole theme swung hardest in 2019: 5 of 21 companies on the "Worse" side.
9 other companies' latest entry also says "Materialised".
- FY2026MaterialisedAnnual report
「The Group withdrew from the production of certain special-specification products for overseas markets for which no improvement in profitability was expected over the long term. It also decided to dismantle and remove assets for which no use in their intended applications or conversion to other uses was expected, rendering them idle. As a result, an impairment loss of ¥438 million was recognized as an extraordinary loss.」
Production was discontinued and equipment for which no improvement in profitability was expected was rendered idle, resulting in an impairment loss of ¥438 million. The risk of difficulty recovering capital investments materialized as an actual loss. - FY2021MitigatedAnnual report
「Before making capital investments, the Group conducts feasibility studies, including research into market conditions, carefully examines the validity of profitability and the investment recovery period, and determines whether to proceed.」
The procedures for conducting market research and examining profitability and the investment recovery period were specified for capital investments, addressing the risk of excessive investment and difficulty recovering investments. - FY2020First statedAnnual report
「If the market size contracts significantly from the initial assumptions and production capacity becomes excessive, business profitability may deteriorate, making it difficult to recover the investment and potentially affecting operating results through the recognition of impairment losses or disposal losses on property, plant and equipment and other assets.」
The risk was separately identified that investments in production facilities and other assets could become difficult to recover, with impairment or disposal losses arising if a contraction in market size made production capacity excessive.