Unprofitable Project and Specification Change Risks
First written in FY2016. 8 of 19 entries say "Mitigated", first in FY2024-Q1. Latest entry: 2026-10-28.
Creo moved to the "Worse" side of this theme in 2021, 1 year before the typical company in this theme (2022).
The whole theme swung hardest in 2017: 9 of 33 companies on the "Worse" side.
16 other companies' latest entry also says "Mitigated".
- FY2026-H1MitigatedAnnual report
「Net sales decreased by ¥152 million year on year due mainly to the shift of resources to in-house services. Operating profit increased by ¥13 million as the impact of high-cost projects in the previous fiscal year was absorbed.」
The impact of deteriorating profitability caused by high-cost projects that actually occurred in the previous fiscal year had recovered during the interim period, resulting in a ¥13 million year-on-year increase in operating income. - FY2025-H1MaterialisedAnnual report
「The acquisition of strategic orders increased net sales by ¥11 million year on year. However, operating profit decreased by ¥96 million due to the impact of lower profitability during the first quarter of the current fiscal year.」
The decline in profitability of strategically accepted projects actually materialized as the risk that even projects expected to be profitable could become unprofitable, resulting in a ¥96 million decline in operating income. - FY2024MitigatedAnnual report
「Following the completion of the high-cost project, net sales increased by ¥202 million year on year and operating profit increased by ¥221 million.」
The completion of high-cost projects that had become unprofitable mitigated the full-year impact on earnings of deteriorating project profitability. - FY2024-Q3MitigatedAnnual report
「As high-cost projects approached completion, revenue increased by ¥162 million year on year and operating profit increased by ¥197 million year on year.」
The completion of high-cost projects that had become unprofitable mitigated the impact of deteriorating project profitability and was a factor improving operating income. - FY2024-Q2MitigatedAnnual report
「Revenue declined by ¥6 million year on year due to the reactionary decline following the completion of large projects, while operating profit increased by ¥63 million year on year as high-cost projects approached completion.」
The completion of high-cost projects that had become unprofitable resulted in a ¥63 million year-on-year increase in operating income, mitigating the impact of deteriorating project profitability. - FY2024-Q1MitigatedAnnual report
「Operating profit increased by ¥40 million year on year, owing in part to a rebound following the completion of high-cost projects.」
For high-cost projects that became unprofitable, the recovery accompanying their completion was identified as a factor improving operating income. - FY2023MaterialisedAnnual report
「The high-cost conditions that arose in a strategically won project led to higher development costs as the project approached completion, as well as opportunity losses involving personnel.」
The risk that a project expected to be profitable when the order is accepted could become unprofitable actually materialized in the form of high costs and increased development costs in strategically accepted projects. - FY2023-Q3MaterialisedAnnual report
「Although orders remained solid, revenue declined by ¥579 million year on year and operating profit declined by ¥170 million year on year, mainly due to the impact of the strategic-order projects described above.」
The impact of strategically accepted projects actually occurred and was a factor reducing sales in the Solution Services business by ¥579 million and operating income by ¥170 million. - FY2023-Q2MaterialisedAnnual report
「Operating income decreased by ¥108 million year on year because projects for which the company accepted orders strategically fell significantly short of plan.」
Projects falling significantly short of plan actually occurred and were a factor reducing operating income by ¥108 million year on year. - FY2023-Q1MaterialisedAnnual report
「Although orders remained solid, revenue declined by ¥46 million year on year and operating profit declined by ¥107 million, due to changes in the business model driven by cloud demand exceeding expectations, as well as projects undertaken as strategic orders falling substantially short of plan.」
Projects falling short of plan actually occurred and were cited as a factor reducing operating income in the Solution Services business by ¥107 million year on year. - FY2022-Q3MaterialisedAnnual report
「Operating profit decreased by ¥126 million year on year due to the impact of certain unprofitable projects.」
The disclosure states that the impact on earnings from unprofitable projects actually occurred during the cumulative third-quarter period. - FY2022-Q2MaterialisedAnnual report
「Operating profit decreased by ¥10 million year on year due to product development and PR investment aimed at converting products into cloud services, as well as certain unprofitable projects.」
Some unprofitable projects actually occurred and were cited as a factor reducing operating income by ¥10 million year on year. - FY2019RestatedAnnual report
「Even a project expected to be profitable when the contract is awarded may ultimately become unprofitable if it involves development under new technical specifications, unexpected specification changes arise during development, or development man-hours increase beyond the initial estimate.」
The company continues to identify the risk of increased development man-hours and projects becoming unprofitable due to new technical specifications or unexpected specification changes. - FY2018RestatedAnnual report
「Even a project expected to be profitable when the contract is awarded may ultimately become unprofitable if it involves development under new technical specifications, unexpected specification changes arise during development, or development man-hours increase beyond the initial estimate.」
The company continues to identify the risk of increased development man-hours and projects becoming unprofitable due to new technical specifications or specification changes, along with measures involving the PMO and other functions. - FY2016First statedAnnual report
「Even a project expected to be profitable when the contract is awarded may ultimately become unprofitable if it involves development under new technical specifications, unexpected specification changes arise during development, or development man-hours increase beyond the initial estimate. To prevent such unprofitable projects, the company manages projects above a certain scale with the Project Management Office (PMO) at the center, reviewing estimates and risk factors at the time of order acceptance, improving estimate accuracy and establishing development methodologies.」
The company identifies the risk of projects becoming unprofitable due to specification changes and increases in development man-hours, and also describes measures involving the PMO and other functions.