What is the outlook for absorption of fixed production costs in the upcoming quarters?

Short answer:

The press release does not contain an explicit forward‑looking statement about the expected absorption of fixed production costs in the next quarters. It only explains why absorption was weaker in Q2 2025 and in the first half of 2025.

What the release tells us

Key take‑aways:

• Fixed‑cost absorption is a cost‑structure issue: The company’s profitability is very sensitive to how much of its fixed manufacturing overhead can be spread over the units it produces.
• Reduced production volumes → lower absorption: When the plants run below optimal capacity, a larger share of fixed costs remains “unabsorbed” (i.e., not covered by revenue), dragging earnings down.
• Inventory buildup amplifies the problem: Higher finished‑goods inventory forces the company to hold more products without the corresponding sales needed to spread fixed costs, further inflating unabsorbed costs.

How to infer the near‑term outlook

Even though the release does not give a direct forecast, we can deduce the company’s likely strategic focus for the upcoming quarters:

1. Increase production utilization
   
   Rationale: The narrative repeatedly points to “operating our production facilities at reduced rates” as a root cause. Management will almost certainly aim to raise run rates (e.g., by securing more customer orders, optimizing scheduling, or possibly adding shifts) to bring the plant utilization closer to capacity, which would improve cost absorption.

2. Control inventory levels
   
   Rationale: “Higher distribution and warehousing costs resulting from an increase in finished goods inventory” were highlighted as a contributor to higher unabsorbed costs. Reducing inventory (through better demand forecasting, sales promotions, or tighter supply‑chain coordination) would lower warehousing expenses and help align production with sales, again improving absorption.

3. Potential pricing or product‑mix adjustments
   
   While not expressly mentioned, companies facing under‑absorbed fixed costs sometimes try to shift to higher‑margin products or adjust pricing to better cover overhead. This may be part of the broader turnaround plan.

4. Cost‑management initiatives
   
   The company may look at discretionary cost cuts (e.g., SG&A, logistics) to offset the impact of any residual unabsorbed fixed costs while it works on volume recovery.

Possible scenarios for the next quarters

Given the explicit admission that the current loss stems from “lower production volumes” and “higher unabsorbed fixed costs,” it is reasonable to assume that the company’s internal outlook is cautiously optimistic that steps will be taken to improve utilization. However, without a formal guidance statement, we cannot assign a concrete quantitative expectation (e.g., “absorption will improve by X%”).

Bottom line for the question

• Explicit outlook: None is provided in the news release.
  
• Implied outlook: The company is likely to focus on increasing production volumes and reducing finished‑goods inventory in order to improve the absorption of its fixed production costs in the upcoming quarters. The success of those actions will determine whether earnings swing back toward profit or remain modestly negative.
  

If you need a more precise forward‑looking statement (e.g., management’s formal guidance on utilization percentages or expected absorption ratios), you would have to look for a separate earnings‑call transcript, investor presentation, or a follow‑up release where management explicitly addresses future cost‑absorption expectations.