The Impact of COVID-19 on Business and Uncertainty over the Outlook

「Regarding the impact of COVID-19, lockdowns were imposed in Shanghai, China, from late March through May 2022 as infections caused by the Omicron variant spread, restricting production at the Shanghai plant for approximately 2 months. However, the impact on results for the current fiscal year was limited. As of the filing date, the classification of COVID-19 under the Infectious Diseases Control Law was expected to be changed from Category 2 (equivalent) to Category 5, and we expected the situation to stabilize. We will nevertheless continue to monitor the impact of the pandemic.」

「There have been no material changes to the assumptions, including accounting estimates concerning the impact of COVID-19, described in the “Additional Information” section of the annual securities report for the previous consolidated fiscal year.」

「During the second quarter of the current consolidated cumulative period, the Japanese economy continued to face an uncertain outlook due to accelerating global inflation, the rapid depreciation of the yen, the lockdown in Shanghai, China, and concerns about recession in Europe and the United States. In addition, the renewed spread of infections caused by Omicron subvariants has further heightened uncertainty regarding the outlook.」

「During the first quarter of the current consolidated cumulative period, the sixth wave of COVID-19 infections, centered on the Omicron variant, had subsided somewhat and restrictions on economic activity were temporarily eased. However, the number of new cases remained high, and the outlook remained uncertain.」

「A lockdown was imposed in Ho Chi Minh City, Vietnam, following a rapid increase in Delta-variant infections, restricting production at our Vietnam plant for approximately 2.5 months. However, the impact on results for the current fiscal year was limited. As of the filing date, we expected the situation regarding the pandemic to stabilize, partly because third-dose vaccinations had begun.」

「During the third quarter of the current consolidated cumulative period, the number of new COVID-19 cases in Japan declined as vaccination progressed to levels comparable with Europe and the United States. Restrictions on economic activity were temporarily eased, but so-called breakthrough infections after vaccination were observed in some cases, and the outlook remained uncertain.」

「Japan’s economy during the second quarter of the current consolidated cumulative period remained in a severe condition, as the spread of COVID-19, including variants, continued and restrictions on economic activity remained in place despite progress in vaccinations. There were signs of recovery in capital investment and other areas, but the outlook remains uncertain.」

「Within our group, there was no suspension of production activities at factories of the kind seen in the previous consolidated fiscal year, and orders in the automotive and robotics business were recovering. However, we cannot rule out the possibility that the infection will affect raw-material procurement, distribution conditions and customer orders, including in other segments, and the outlook is expected to remain uncertain.」

「Within our group, in the joint fittings business, our two Chinese subsidiaries, Tianjin Tenryu Hose Industry Co., Ltd. (Tianjin, China) and Tianfu Vacuum Equipment Hose (Shanghai) Co., Ltd. (Shanghai, China), suspended operations in accordance with guidance from the Chinese authorities for approximately 3 weeks and approximately 1 week, respectively, after the Chinese New Year holiday due to the spread of COVID-19 in China. In the automotive and robotics business, Tube Forming Co., Ltd.’s Shizuoka plant suspended operations for 35 business days and its Yokohama plant for 5 business days as orders declined due to the impact of the infection. However, the overall impact on our group’s results was limited. Nevertheless, although signs of recovery were visible in the automotive and robotics business, orders continued to decline, while the disaster prevention and construction business was affected by rising costs. As impacts were already emerging in some segments, we cannot rule out the possibility that the infection will affect raw-material procurement, distribution conditions and customer orders across other segments as well, and the outlook is expected to remain uncertain.」

「Within our group, in the joint fittings business, our two Chinese subsidiaries, Tianjin Tenryu Hose Industry Co., Ltd. (Tianjin, China) and Tianfu Vacuum Equipment Hose (Shanghai) Co., Ltd. (Shanghai, China), suspended operations in accordance with guidance from the Chinese authorities for approximately 3 weeks and approximately 1 week, respectively, after the Chinese New Year holiday due to the spread of COVID-19 in China. In the automotive and robotics business, Tube Forming Co., Ltd.’s Shizuoka plant suspended operations for 35 business days as orders declined due to the impact of the infection. However, the impact on our group’s results was limited. Nevertheless, we cannot rule out the possibility that the impact of the infection will spread to raw-material procurement, distribution conditions and customer orders, and the outlook is expected to remain uncertain.」

「The impact of the spread of COVID-19 on our group’s results during the first quarter of the current consolidated cumulative period was limited, but the outlook remains uncertain and we will continue to monitor developments closely. As the infection spread in China, our two Chinese subsidiaries, Tianjin Tenryu Hose Industry Co., Ltd. (Tianjin, China) and Tianfu Vacuum Equipment Hose (Shanghai) Co., Ltd. (Shanghai, China), suspended operations in accordance with guidance from the Chinese authorities, for approximately 3 weeks and approximately 1 week, respectively, after the Chinese New Year holiday.」