Political, economic and legal-system risks in countries where the Group operates

「円安傾向、海外展開見直しにより、日系企業の新規進出が減少傾向」

「In addition to U.S. policy developments and heightened geopolitical risks, uncertainty about the outlook remains due to the effects of fluctuations in the material procurement environment and tight labor supply and demand, and the business environment is expected to remain unpredictable.」

「一方で、米国の政策動向や地政学リスクの高まりに加え、資材調達環境の変動や労務需給の逼迫等の影響による先行きの不透明感があり、引き続き予断を許さない事業環境が続くものと見込まれます。」

「In the Southeast Asian construction markets where the Company operates, the situation remains unpredictable due to intensified competition for orders with local construction companies, rising labor and material costs and heightened geopolitical risks. At the same time, Western companies continue to invest in production facilities and data centers targeting the Asian market, while rising economic strength in Southeast Asia is driving increased investment in logistics warehouses, commercial facilities and high-rise housing, and further growth in demand is expected.」

「In the Southeast Asian construction markets where the Company operates, new industrial parks and large-scale urban redevelopment projects are increasing, and residential projects that had stagnated since the COVID-19 pandemic are also showing signs of recovery. However, Japanese companies remain cautious about capital investment in facilities such as factories and warehouses, and the challenging order environment continues.」

「In the overseas construction markets in Southeast Asia where the Company operates, the challenging order environment continues due to a decline in Japanese companies' expansion into Southeast Asia caused by yen depreciation and global instability, a slowdown in the Chinese economy, and sluggish construction investment resulting from soaring construction costs.」

「In Southeast Asia, where the Company operates its construction business, the economic recovery remains slow, but the surge in material and labor prices that occurred during the COVID-19 pandemic has eased, and construction plans, including investments from overseas, are gradually moving into full swing.」

「In the overseas construction market, although the effects of the spread of COVID-19 have subsided, the number of residential projects has declined due to the impact of China's property bubble. In addition, companies have begun to show greater caution toward capital investment in facilities such as factories and warehouses, and the challenging order environment continues.」

「Overseas, numerous factors could push the economy lower, including a slowdown in the U.S. and European economies due to prolonged high-interest-rate policies, a slump in the Chinese economy weighed down by property deflation, rising debt burdens in developing countries and a global downturn in the semiconductor market. Concerns about a synchronized global recession are increasing.」

「In the overseas construction market, the challenging order environment continues due to sluggish construction investment caused by soaring material prices and labor costs, as well as intensified competition for orders.」

「Overseas, there are numerous concerns that could affect economic trends, including a synchronized slowdown in the U.S. and European economies due to monetary tightening, the prolonged Russian invasion of Ukraine and the collapse of China's property bubble. In Japan, these include weakening consumer sentiment due to rising prices, lower earnings at exporting companies due to the recent appreciation of the yen, and future monetary policy to address advancing inflation. The outlook therefore remains uncertain.」

「Amid continued increases in resource prices, the framework of the global economy has been disrupted by Russia's invasion of Ukraine, global inflation has become more pronounced, and Japan's low-interest-rate policy, which differs from interest-rate policies in Europe and the United States, has also contributed to a sharp depreciation of the yen. As a result, uncertainty about the outlook remains unresolved.」

「The business environment surrounding the Group is expected to benefit from economic revitalization as COVID-19 subsides. However, the situation remains unpredictable, as global inflation triggered by developments in Ukraine and yen depreciation resulting from changes in monetary policies in various countries could significantly affect the recovery of the global and Japanese economies.」

「During the third quarter of the current consolidated cumulative period, the Japanese economy had been showing a stronger tendency toward recovery as the fifth wave of COVID-19 subsided. However, downside risks to the economy have recently increased due to the renewed rise in infections resulting from the Omicron variant, the shift toward rapid monetary tightening in the United States, a slowdown in the Chinese economy, surging crude oil prices partly related to developments in Eastern Europe, and prolonged supply chain disruptions.」

「In the Southeast Asian countries where the company operates, construction delays caused by local authorities’ COVID-19-related restrictions, soaring material prices and labor costs, and deteriorating profitability on some projects led to a downward revision of the full-year forecast during the first half of the fiscal year.」

「In the overseas construction business, the renewed spread of COVID-19 in Southeast Asia has led various countries to impose activity restrictions, resulting in a succession of closures of business offices and worksites. In addition, the closure of construction-material plants due to lockdowns in neighboring countries has caused material prices and labor costs to rise sharply.」

「Economic activity also contracted significantly in Southeast Asian countries, and some countries imposed restrictions on movement that constrained order-taking activities, resulting in a challenging order environment both in Japan and overseas.」

「Under these circumstances, the Group had been working to expand orders through technical proposals and improve productivity, while thoroughly implementing measures against COVID-19 to advance construction. However, the situation became challenging due to construction suspensions caused by lockdowns at some overseas subsidiaries and continuing restrictions on access to sites even after construction resumed.」

「Under these circumstances, the Group had been working to advance construction while thoroughly implementing measures against COVID-19. However, construction at some overseas subsidiaries was suspended from April to June due to lockdowns, and even after construction resumed, the effects of labor shortages and restrictions on access to sites remained, resulting in a situation where recovery required time.」

「In the overseas construction business, worksites and offices at some subsidiaries in Southeast Asia were closed, but construction has been gradually resuming on a limited basis.」

「Some of the Group's consolidated subsidiaries in Southeast Asia were affected by the suspension of business activities and other disruptions after closing worksites and offices due to tighter regulations imposed by local authorities, resulting in delays in the preparation of financial results.」

「During the third quarter of the current consolidated cumulative period, the Japanese economy remained on a moderate recovery track due to improvements in corporate earnings and employment and income conditions. However, it continued to face an uncertain outlook as a result of uncertainty in the global economy caused by U.S.-China trade tensions and the UK's withdrawal from the EU. In Southeast Asian countries, the economies remained firm, but competition with other companies for orders intensified.」

「During the second quarter of the current consolidated cumulative period, the Japanese economy continued to recover moderately due to increases in personal consumption and capital investment. However, amid the prolonged U.S.-China confrontation, a slowdown in the Chinese economy, the UK's withdrawal from the EU and unstable crude oil prices, concerns over a "synchronized global economic slowdown" have led manufacturing companies to reduce capital investment recently, and signs of economic stagnation have intensified.」

「During the first quarter of the current consolidated cumulative period, the Japanese economy remained on a moderate recovery track due to improvements in employment and income conditions. However, overall global economic growth slowed amid U.S.-China trade tensions, a slowdown in the Chinese economy and political turmoil in Europe, and the outlook remains uncertain.」

「During the third quarter of the current consolidated cumulative period, the Japanese economy remained on a moderate recovery track due to firm corporate earnings and improvements in employment and income conditions. However, the outlook remains uncertain amid concerns over a stagnation in the global economy resulting from intensifying U.S.-China tensions and expanding friction in certain regions.」

「The overseas economies are also continuing to recover moderately, supported by the strong U.S. economy, while Europe and Asia are also seeing a gradual recovery. However, numerous risk factors could weigh on the robust global economy, including U.S.-China trade tensions, U.S. interest-rate policy, a slowdown in the Chinese economy and the situation in the Middle East, increasing uncertainty about the outlook.」

「During the first quarter of the current consolidated cumulative period, the Japanese economy remained on a moderate recovery track, with exports and production holding firm on the gradual recovery of the overseas economies, against a backdrop of improving corporate earnings and employment conditions. However, the outlook remains uncertain due to rising risks and increasing uncertainty in the overseas economies. In Southeast Asian countries, domestic demand has continued to grow steadily, supported by increased capital investment resulting from improved corporate earnings, but competition for orders continues to intensify.」

「Although the overseas economies are recovering moderately, the outlook remains uncertain due to factors including political developments in the United States and geopolitical risks in certain regions. In Southeast Asian countries, the economies remain firm, but competition with other companies for orders has intensified, and the challenging order environment continues.」

「The overseas economies continue to recover in the United States, the euro area and Asia, despite potential risks such as political developments in the United States, concerns over conflicts in certain regions and a slowdown in the Chinese economy. Meanwhile, in Southeast Asian countries, construction of housing and commercial facilities has become more active as their economies have developed, but the order environment has become increasingly challenging due to the leveling off of Japanese manufacturers' overseas expansion and the growing presence of local construction companies.」

「The Group operates an overseas construction business primarily in Southeast Asia, but significant changes in the political or economic conditions or legal systems of the countries where it operates may affect future business performance.」