Rising Raw Material and Construction Material Costs

「Although costs for housing materials, labor and other items continue to rise, the company was able to secure an appropriate gross profit through synergies from the vertically integrated SPA model with its subsidiary Sachi no Kuni Mokuzai Kogyo.」

「Meanwhile, uncertainty remains high and the outlook continues to be unclear due to persistently elevated raw material and energy prices, the impact of inflation and higher labor costs on corporate earnings, developments in U.S. trade and tariff policy, and the slowdown in the Chinese economy.」

「Although costs for housing materials, labor and other items continue to rise, synergies from the vertically integrated SPA model with its subsidiary Sachi no Kuni Mokuzai Kogyo have begun to emerge,」

「Although manufacturing costs remain elevated due to ongoing inflation, the acquisition of Sachi no Kuni Mokuzai Kogyo Co., Ltd. reduced timber costs, while the promotion of DX (digital transformation) around construction sites also contributed, reducing costs and improving profit margins.」

「In the custom-built housing industry, persistently rising costs have directly resulted in a substantial decline in profit across the industry. We are working to reduce costs across the group, including by bringing a timber-processing company under the group's umbrella, and the resulting improvement in gross profit has begun to emerge.」

「Although we continue to be affected by soaring raw material prices, the gross profit margin is improving as a result of measures including reviewing selling prices, negotiating procurement prices and promoting in-house construction work.」

「Meanwhile, orders remained sluggish against a backdrop of weaker consumer sentiment due to inflation, including soaring energy prices. In addition, the gross profit margin remained at 25.8% because inflation drove up manufacturing costs.」

「Meanwhile, price increases for building materials have continued. In addition to intensifying competition under these difficult conditions, higher costs put pressure on profit because the company had a large order backlog for major housing developments that had already been contracted with customers before costs rose.」

「The outlook remained uncertain amid soaring resource and energy prices due to the protracted situation in Ukraine, a sharp depreciation of the yen in foreign exchange markets, and production constraints and worsening shortages caused by supply-chain disruptions in the market following lockdowns in China.」

「Building-material prices continue to rise. Although we have implemented multiple measures to improve the gross margin, including reviewing selling prices and negotiating procurement prices, the margin has not reached the assumed level, and the gross profit margin declined.」

「Although housing-material prices have soared amid global inflation, including higher energy prices, we will give top priority to stabilizing procurement and securing supply. We will therefore work to diversify procurement routes and advance risk hedging.」

「Price increases for many building materials have continued to affect the profit plan. Measures to improve gross profit have been implemented, and improvement is expected from the fourth quarter onward.」

「In addition, the “wood shock,” or soaring prices amid a global tightening of timber supply and demand originating in the sharp increase in housing construction demand in the United States and elsewhere due to the global spread of COVID-19, has yet to ease and remains elevated. Higher prices for housing components have also continued to affect gross profit. Selling-price revisions have already been completed, and improvement is expected from the third quarter onward.」

「Although timber prices have soared amid rising global demand for timber, we will give top priority to stabilizing procurement and securing supply. We will also take measures such as adjusting selling prices to secure an appropriate level of profit.」

「In addition, as the construction boom prompted by the 2020 Tokyo Olympic and Paralympic Games continues, concerns remain that construction costs, including building materials, will continue to rise.」

「At the same time, in addition to rising labor costs due to labor shortages, higher raw material prices put pressure on corporate earnings. Sentiment among large companies in the manufacturing sector deteriorated for the first time in 2 years, while uncertainty about the outlook for businesses remained.」

「If procurement prices for raw materials and supplies rise due to increased demand or higher prices, this could affect our business results and other factors.」

「If procurement prices for raw materials and supplies rise due to increased demand or higher prices, this could affect our business results and other factors.」