Weak apparel sales and sluggish Olympic-related orders

「In the various Middle Eastern markets, the decline in novel coronavirus cases from the beginning of the year led customers to place orders for products earlier than scheduled, allowing the Company to record sales exceeding budget.」

「Demand in overseas markets continued to decline for fabric sales to the Middle East because of the impact of the infectious disease, and conditions remained challenging. In addition, delays in processing and shipment caused by container shortages at processing facilities and higher logistics costs resulted in sales volumes falling well below the originally planned level.」

「Shipments of products for the next season’s Ramadan sales to the Middle East began in November 2021, but processing and shipment were delayed because of container shortages and higher logistics costs. As a result, some planned sales volumes were pushed back to January 2022 or later.」

「Fabric sales to the Middle East remained challenging in the second quarter of the current consolidated accounting period, continuing from the preceding quarter because of the impact of the novel coronavirus disease. Demand from tourists in the Middle East market declined, and major companies’ excess inventories also had an impact, resulting in subdued order and shipment volumes. Meanwhile, fabric sales to Southeast Asia progressed relatively smoothly in terms of orders and shipments and sales, supported by increased demand from events held locally and other factors.」

「Fabric sales to the Middle East continued to face challenging conditions in terms of pricing, as entry restrictions resulting from the novel coronavirus disease limited on-site sales activity because of restrictions on business travel. Meanwhile, although some fabric sales to Southeast Asia were affected by the novel coronavirus disease, orders and shipments and sales progressed relatively smoothly.」

「The Spinning business remained in extremely challenging conditions, affected by lower demand resulting from the spread of the novel coronavirus disease. Although automobile production, the main application for the Company’s core aramid fibres, began to recover from the third quarter onward, there was a lag of several months before spun-yarn order volumes recovered, and orders did not recover during the consolidated fiscal year.」

「Orders in the Spinning business remained extremely challenging, affected by lower demand resulting from the spread of the novel coronavirus disease, and conditions remained severe as in the second quarter. Although automobile production, the main application for the Company’s core aramid fibres, began to recover, there was a lag of several months before spun-yarn order volumes recovered, and orders did not recover during the period. Although spun yarn for premium innerwear entered its demand season, orders declined rather than increasing because of excess inventories.」

「The spinning business remained in extremely difficult conditions as demand continued to decline due to the spread of COVID-19, as in the first quarter. Automotive production trends, the main application for the Company's aramid fiber, were more difficult than expected and, although recovery began from the bottom in the second quarter, the situation remains unpredictable. In addition, orders for spun yarn for luxury innerwear declined substantially due to the mild winter and excess inventories.」

「Orders for core aramid fibre declined again because of the economic deterioration in the automotive industry, while orders for spun yarns for premium innerwear also remained weak because of the mild winter. In addition, order-related activities stagnated as customer companies refrained from sales activities due to the impact of COVID-19, resulting in an extremely difficult business environment.」

「Although the textile industry surrounding the Company benefited from special demand for uniforms related to the Tokyo Olympics, the impact of unusually warm winters for 2 consecutive years caused weak sales of winter apparel, while the consumption tax increase led to a sharp rise in inventories at department stores and mass retailers, casting a major shadow over business conditions.」

「In the textile industry, apparel benefited from special demand for uniforms related to the Tokyo Olympics, but the impact of the unusually warm winter was substantial, resulting in a considerable increase in winter apparel inventories. Together with the impact of the consumption tax increase, this meant that sales at department stores and mass retailers continued to struggle. Exports also began to decline because of the slowdown in the Chinese economy and worsening Japan–South Korea relations. Signs of weakness have also begun to emerge in automotive-related products, which had remained strong, and conditions may become increasingly challenging going forward.」

「Although some fields, particularly sportswear and uniforms, remained firm, domestic sales overall remained sluggish.」

「In the textile industry, weak sales at department stores and supermarkets in the apparel field have become entrenched, while Olympic-related orders for next fiscal year have also failed to grow as expected, leaving overall conditions subdued.」