Earnings Deterioration Due to Slower Growth in Emerging Markets and Falling Commodity Prices

「During the consolidated fiscal year, uncertainty continued over changes in US tariff policy and the impact of the situation in the Middle East on the global economy and business conditions. In particular, energy and other prices have risen sharply due to the situation in the Middle East, and continued vigilance is required regarding the risk of accelerating global inflation and the possibility of declining consumer and production activity.」

「特に中東情勢によってエネルギーをはじめ物価が高騰しており、世界的にインフレが加速するリスクや、消費活動及び生産活動が低下するおそれには引き続き警戒が必要です。」

「Looking ahead, heightened uncertainty over tariff increases and policy management is expected to restrain the expansion of capital investment and trade, while higher prices resulting from increased trade costs and deteriorating consumer sentiment are expected to slow consumer activity. As a result, global economic growth is expected to decline through 2026.」

「During the consolidated fiscal year, central banks in countries other than Japan began shifting from monetary tightening to easing. Meanwhile, geopolitical uncertainty has increased due to the prolonged Russian invasion of Ukraine, the unpredictable situation in the Middle East, sluggish economic conditions in China and, from January 2025, policy changes by the new US administration.」

「During the first nine months of the consolidated fiscal year, expectations grew for an economic recovery as global economic activity became more active following the recovery from the COVID-19 shock. However, downside pressure on the global economy continued due to the prolonged Russian invasion of Ukraine, uncertainty arising from heightened geopolitical risks, including the increasingly tense situation in the Middle East, the deterioration of China's real estate market and sluggish demand, and persistent inflation in advanced economies, although inflation was slowing, together with the continuation of monetary tightening by central banks. Concerns about a future economic downturn therefore require close monitoring.」

「During the first six months of the consolidated fiscal year, expectations grew for an economic recovery as global economic activity became more active following the recovery from the COVID-19 shock. However, downside pressure on the global economy continued due to the prolonged Russian invasion of Ukraine, uncertainty arising from heightened geopolitical risks, including the increasingly tense situation in the Middle East, persistent inflation in advanced economies and monetary tightening by central banks, requiring close monitoring of concerns about a future economic downturn.」

「During the first quarter of the consolidated fiscal year, expectations grew for a recovery in economic activity as COVID-19 restrictions were lifted worldwide. However, downside pressure on the global economy intensified due to the prolonged Russian invasion of Ukraine, persistent inflation in advanced economies and monetary tightening by central banks, requiring close monitoring of concerns about a future economic downturn.」

「During the consolidated fiscal year, downward pressure on the global economy became evident as Russia’s military invasion of Ukraine was prolonged and monetary tightening aimed at curbing inflation continued. Following bank failures in the United States and concerns over the management of banks in Europe, financial authorities in various countries moved quickly to prevent the spread of credit concerns.」

「During the cumulative third-quarter period of the consolidated fiscal year, downward pressure on the global economy increased due to the continued military invasion of Ukraine by Russia and the effects of sanctions imposed by various countries, accelerating inflation and the resulting global monetary tightening, and uncertainty over the outlook for China’s economy. Although the novel coronavirus pandemic was subsiding except in some areas including China, concerns over a future recession require continued monitoring.」

「During the cumulative second-quarter period of the consolidated fiscal year, downward pressure on the global economy increased due to Russia’s military invasion of Ukraine and the effects of sanctions imposed by various countries, accelerating inflation and the resulting global monetary tightening, and uncertainty over the outlook for China’s economy. Although the novel coronavirus pandemic was subsiding, concerns over a future recession require continued monitoring.」

「During the cumulative first-quarter period of the consolidated fiscal year, downward pressure on the global economy increased due to Russia’s military invasion of Ukraine and the sanctions imposed by various countries, as well as lockdowns in China following the spread of the novel coronavirus pandemic. Continued attention is required to concerns over an economic recession, including persistent high inflation and declining demand resulting from monetary tightening by central banks, along with the possibility of a renewed spread of the pandemic.」

「During the period, downward pressure on the global economy increased amid the start of Russia’s military invasion of Ukraine and the effects of sanctions imposed by various countries. Continued vigilance is required over surging resource prices, supply constraints and accelerating inflation resulting from supply-chain disruptions, sharp interest-rate increases and yen depreciation caused by monetary tightening by central banks, as well as the possibility of a renewed spread of the novel coronavirus.」

「The market impact, including potential currency declines caused by capital outflows from emerging markets as a result of monetary tightening by the Federal Reserve and other central banks, also requires continued monitoring.」

「Some emerging markets have begun raising policy interest rates out of concern over inflation, and economic trends require continued monitoring.」

「In Asia, the IMF substantially lowered its 2021 growth forecasts for emerging Asian economies, including ASEAN, in its latest World Economic Outlook following a rapid recent increase in infections in Vietnam and other countries that had been recovering on an export-led basis.」

「During the cumulative third-quarter period of the consolidated fiscal year, the pace of recovery in the global economy slowed as restrictions were imposed on economic activity following the renewed spread of the novel coronavirus pandemic, centered in Europe and the United States, during the third quarter, although the economy had been on a recovery trend during the summer. Although an economic recovery is expected as vaccines and treatments enter practical use, economic uncertainty continues as infections persist in the United States, Europe and elsewhere and new variants emerge.」

「Revenue for the cumulative second-quarter period declined 16.7% year on year to ¥744.622 billion, due to lower automotive revenue resulting from fewer vehicle sales in the overseas automotive business, lower chemical revenue resulting from reduced synthetic-resin transactions and lower methanol prices, and lower metals and resources revenue resulting from lower coal prices and the sale of equity interests at the end of the previous fiscal year.」

「In the financial results for the first quarter of the fiscal year ending March 2021, the impact of the spread of the novel coronavirus pandemic on demand for steel products and resource prices, including coal, exceeded the assumptions made at the beginning of the fiscal year and was expected to continue. Accordingly, the consolidated earnings forecast for the fiscal year ending March 2021 was revised as follows.」

「In 2020, the impact expanded to include weaker demand caused by the novel coronavirus and a substantial decline in sales across industries. In anticipation of a slowdown in the global economy due to the effects of the novel coronavirus pandemic, the outlook was prepared based on information available to the Company as of 31 March 2020, assuming that current conditions would continue for 3 months, through June 2020. Net income was projected at ¥40 billion, ROA at 1.8% and ROE at 6.8%.」

「During the cumulative third-quarter period of the consolidated fiscal year, economic growth in developed economies continued to slow due to US-China trade tensions, slower growth in China’s economy and geopolitical risks. The impact on global economic conditions of the US-China trade effects under the Phase One Agreement signed in January 2020, Brexit, conditions in the Middle East, US monetary policy and the spread of the novel coronavirus will require continued monitoring.」

「During the cumulative second-quarter period of the consolidated fiscal year, slower growth in China’s economy resulting from US-China trade tensions began to affect the global economy, particularly emerging-market economies. The course of US-China negotiations, Brexit, conditions in the Middle East and US monetary policy will require continued monitoring.」

「Revenue declined 13.7% year on year to ¥93.361 billion, mainly due to lower selling prices in the overseas coal business.」

「During the cumulative third-quarter period of the consolidated fiscal year, the global economy, which had previously been supported by resilient consumption, began to show signs of slowing due to the slowdown in China’s economy and falling resource prices. Going forward, continued monitoring will be necessary not only of economic trends in China, but also of US domestic and foreign policy issues, the uncertain Brexit negotiations, and foreign exchange and economic trends in emerging markets.」

「During the cumulative second-quarter period of the consolidated fiscal year, the global economy remained firm, supported by growth in developed and emerging-market economies underpinned by resilient consumption. Resource prices also remained firm. At the same time, the impact of US interest-rate hikes, trade negotiations and instability in the Middle East on foreign exchange rates, commodity markets and emerging-market economies requires continued monitoring.」

「During the cumulative third-quarter period of the consolidated fiscal year, the global economy remained firm as developed economies grew on expanding consumption and emerging-market economies grew as a result. Resource prices also remained firm against a backdrop of strong demand.」

「During the cumulative second-quarter period of the consolidated fiscal year, the global economy remained firm on solid economic growth in both developed and emerging markets. Resource prices also remained stable against a backdrop of solid demand.」

「During the cumulative first-quarter period of the consolidated fiscal year, the global economy remained firm, supported by a recovery in emerging-market economies as resource prices remained stable.」

「As resource prices, including crude oil and coal, have risen from the beginning of the year, the economies of resource-producing countries are also expected to recover.」

「Revenue declined 26.7% year on year to ¥115.715 billion, mainly due to falling resource prices and lower transaction volumes.」

「Revenue declined 31.4% year on year to ¥54.858 billion, mainly due to falling resource prices and lower transaction volumes.」

「Against a backdrop of slowing economic growth in emerging markets, including China, and falling resource prices, uncertainty increased across the global economy.」