Dependence on capital investment and production trends in the automotive industry

「既存の自動車（エンジン等）依存からの脱却」

「Profit remained sluggish because orders in the Direct Sales Division moved into negative territory as it was affected by investment restraint resulting from tariff issues and other factors in the automotive-related industries that are its major markets.」

「In addition to weak demand in the automotive and construction machinery industries, capital investment was generally sluggish, and overall sales did not achieve sustained growth.」

「The main factors were a decline in orders due to the challenging business environment, including worsening business sentiment among small-scale users in the Wholesale Business Department and lower factory operating rates at some customers in the automotive industry, the main market of the Direct Demand Business Department, as well as higher selling, general and administrative expenses due to upfront investment in human capital, which put pressure on profit, although the Machinery Sales Department established last fiscal year achieved some results, including continued steady order acquisition.」

「This was due to weak sales to customers in the automotive industry, our major market, whose business is primarily based on exports to China.」

「The main factor was that, although the newly established Machinery Sales Department actively pursued initiatives to build a system for receiving end-to-end orders for machine tools and other machinery and equipment while leveraging our strength in cutting tools, sales to customers in the automotive industry, our main market for cutting tools, whose business is primarily based on exports to China, remained weak.」

「Although production in the automotive industry, our major market, recovered as the shortage of automotive semiconductors eased, sales to customers whose business is primarily based on exports to China remained weak.」

「Production adjustments caused by the global semiconductor shortage in the automotive industry, our major market, have subsided, and vehicle production is on a recovery trend. However, the year as a whole was affected by production adjustments resulting from supply-chain constraints involving semiconductors and other items.」

「In the automotive industry, our major market, factory operations have been recovering as supply constraints on parts such as automotive semiconductors have eased and exports have remained firm due to the weaker yen. We also worked to expand sales of our core products and original products.」

「In the cutting tools business, the company worked to expand sales of its core products and original products, but sales were sluggish amid severe market conditions, including production cuts and stoppages caused by the semiconductor shortage in the automotive industry, a major customer base. At the same time, the steady pass-through of higher procurement costs into product sales prices resulted in revenue of ¥8,214 million, down 0.2% year on year, and segment profit of ¥124 million, up 325.8% year on year, resulting in lower revenue but higher profit.」

「In the cutting tools business, we pursued proactive sales activities amid disruptions to manufacturers' production caused by the prolonged semiconductor shortage and disruptions in the supply of parts in the automotive industry, our major market. However, sales were ¥3,968 million, down 0.8% year on year, and segment profit was ¥42 million, down 11.7%, resulting in lower sales and profit.」

「In Japan, our Group will reduce its dependence on specific industries, particularly the automotive industry, by expanding into the wear-resistant tools and optical products segments. Overseas, we will diversify risk by increasing the number of countries and locations in which we operate to reduce our dependence on specific regions, primarily Japan and China.」

「In the cutting tools business, some concerns remained, including delays in the delivery of certain products due to the global parts shortage. However, proactive initiatives such as developing new customers resulted in higher sales and profit, with sales of ¥12,446 million, up 31.9% year on year, and segment profit of ¥116 million, compared with a segment loss of ¥172 million in the same period of the previous year.」

「In the cutting tools business, amid signs that business conditions for domestic companies, particularly in the automotive industry, were beginning to improve, the company pursued active sales activities, including opening a new Shikoku sales office. As a result, revenue increased to ¥4,000.894 million, up 31.8% year on year, and segment profit was ¥60.349 million, compared with a segment loss of ¥52.202 million in the same quarter of the previous year, resulting in higher revenue and profit.」

「In the cutting tools business, although some demand in the automotive industry and other sectors began to recover, we worked to maintain and improve sales activities through the proactive use of web-conferencing systems and other measures, including the Cominix Online campaign to increase sales and the web-ordering rate. However, these efforts did not offset the decline in sales caused by the sluggish market environment in the first half, and sales and segment profit remained sluggish. As a result, sales were ¥9,438 million, down 15.8% year on year, and the segment loss was ¥205 million, compared with segment profit of ¥282 million in the same period of the previous year.」

「In the cutting tools business, we worked to maintain and improve sales activities through the proactive use of web-conferencing systems and other measures. We also conducted the Cominix Online campaign to increase sales and the web-ordering rate, but these efforts did not offset the decline in sales accompanying the sluggish market environment centered on the automotive industry, and sales and segment profit remained sluggish.」

「In the cutting tools business, we worked to maintain and improve sales activities through the proactive use of web-conferencing systems and other measures even during the COVID-19 pandemic. However, these efforts did not offset the decline in sales accompanying the sluggish market environment centered on the automotive industry, and sales and segment profit remained sluggish.」

「In addition, the spread of COVID-19 resulted in the suspension of operations at factories operated by some customers and affected our supply chain, including through delays in some deliveries.」

「In the overseas business, the company pursued initiatives to accelerate its global expansion, including expanding its workforce and opening the Nimrana office in India in July. However, revenue and segment profit remained weak, mainly because demand related to the automotive industry declined in Asia and North America due to the prolonged US-China trade friction.」

「Cutting tools, our Group's main products, are primarily used by the automotive industry, and the performance of our Group is strongly affected by capital investment and production trends in that industry.」

「In the cutting tools business, operations remained challenging in the first half as production and supply were partially suspended due to issues involving fuel-economy test fraud in the automotive industry, including mini vehicles, and the effects of the Kumamoto Earthquake. Although conditions showed signs of recovery in the second half, the decline in the first half was substantial, and sales and segment profit remained sluggish. As a result, sales were ¥13,672 million, down 2.6% from the previous consolidated fiscal year, and segment profit was ¥259 million, down 31.0%.」

「In the cutting tools business, sales and segment profit remained sluggish, mainly because sales to our major customers in the automotive industry were weak.」

「In the cutting tools business, sales and segment profit remained sluggish, mainly because sales to major customers serving the automotive industry were weak.」

「Cutting tools are primarily used by the automotive industry, and the performance of our Group is strongly affected by capital investment and production trends in that industry.」