Foreign exchange, regulatory and political instability risks associated with overseas business expansion

「However, in addition to intensified price competition in recent years, rapid changes have occurred in the market environment, including soaring global energy and material prices. As we expect the uncertain outlook to continue, we determined that it would be difficult to continue this business and decided to dissolve and liquidate it.」

「Profitability improved in the overseas business as the Group pursued structural reforms, a priority initiative.」

「Losses have continued in the overseas Home & Personal Care business due to delays in responding to geopolitical risks and market fluctuations, among other factors, and the Group is urgently pursuing structural reform.」

「In China, feminine care sales are growing, but baby care is still in the process of a full-scale recovery. In Thailand, baby care and feminine care centered on value-added products drove sales growth.」

「In China, feminine care sales expanded, but baby care, the core business, slowed due to worsening business conditions, the decline in the birth population and the impact of the treated water release from the Fukushima Daiichi Nuclear Power Station. Sales also fell below the same period of the previous year because of delays in responding to changes in consumer purchasing trends and the market.」

「Meanwhile, in the overseas business, sales in China fell below the same period of the previous year due to the country's economic weakness, the decline in the birth population and the impact of consumers refraining from purchases following the release of treated water from the Fukushima Daiichi Nuclear Power Station, as well as delays in responding to changes in consumer purchasing trends and market structures.」

「Meanwhile, in China, sales fell substantially below the same period of the previous year due to the prolonged weakness in the country's economy, as well as the impact of a rapid shift in consumer spending from physical stores to e-commerce after lockdowns and a shift from premium to standard products.」

「In the overseas business, sales in China fell below the same period of the previous year due to lower baby care sales following the aftereffects of the zero-COVID policy, despite progress in expanding feminine care sales. In Southeast Asia, sales also fell below the same period of the previous year due to lower baby care sales following price revisions, despite progress in expanding feminine care sales.」

「As Turkey's cumulative inflation rate over three years exceeded 100%, the Group has consolidated the financial statements of its Turkish subsidiary after making adjustments in accordance with IAS 29, "Financial Reporting in Hyperinflationary Economies," from the beginning of the second quarter of the current fiscal year.」

「In the overseas business, activity restrictions related to the COVID-19 pandemic in Thailand, Indonesia and Brazil, where the Group has major production bases, among other factors, caused both sales volumes and sales to fall short of the initial plan.」

「In the overseas business, activity restrictions related to the COVID-19 pandemic continued in Thailand, Indonesia and Brazil, where the Group has major production bases, while soaring pulp and packaging material prices also had an impact. As a result, profit declined substantially from the initial plan.」

「The Home & Personal Care business recorded a substantial decline in profit compared with the initial plan due to activity restrictions related to the COVID-19 pandemic in Thailand, Indonesia and Brazil, its main production bases, as well as soaring pulp and packaging material prices.」

「In response, the Group shares the latest information collected by Group companies and relevant departments in Japan among the parties concerned, seeking to minimize risks by detecting signs of change as early as possible.」

「In Southeast Asian countries such as Thailand and Indonesia, sales volumes of baby diapers declined from April onward due to the COVID-19 pandemic. In Thailand, where business diversification is progressing, this was offset by expanded sales of antibacterial wipes and feminine care products. In Indonesia, although e-commerce sales continued to grow, sales were below the same quarter of the previous year due to intensifying competition with other companies.」

「In Southeast Asian countries such as Thailand and Indonesia, sales volumes of baby diapers declined from April onward due to the COVID-19 pandemic. In Thailand, where business diversification is progressing, this was offset by expanded sales of antibacterial wipes and feminine care products, while in Indonesia, sales at regional supermarkets and baby stores were strong in the first quarter before the spread of COVID-19. As a result, sales were at the same level as in the same quarter of the previous year.」

「Sales in export markets declined, partly because the impact of the boycott of Japanese products that began in South Korea last year continued.」

「As one of its growth strategies, the Group, led mainly by the Overseas Home & Personal Care Business Division, is pursuing business expansion in China, South Korea, Southeast Asian countries, Russia, Turkey and Brazil. However, overseas business expansion carries risks of changes in the economic environment due to fluctuations in foreign exchange rates, regulations imposed by local governments, deteriorating diplomatic relations and public sentiment, political instability and other factors.」

「In South Korea, sales declined as the impact of the boycott of Japanese products arising from deteriorating Japan–South Korea relations continued.」

「In South Korea, sales temporarily declined due to the impact of a boycott of Japanese products arising from deteriorating Japan–South Korea relations. In Russia, sales were temporarily affected by inventory adjustments associated with changes to distribution channels. As a result, both sales volume and value in the overseas business as a whole fell below the same quarter of the previous year.」

「In the overseas business, sales volume and value fell below the same quarter of the previous year, mainly due to lower sales of baby diapers in Thailand, Russia and South Korea.」

「In South Korea, in response to shrinking demand for baby diapers due to the declining birth rate, the company worked to distribute and expand sales of categories other than baby diapers, including adult diapers and feminine care products. In Indonesia, sales declined as the local main distributor scaled back its business, but the company revised its distributor policy to expand the business in the future and proceeded to establish a new sales policy and the associated distribution channels.」

「The company was affected by lower sales in South Korea, where demand for baby diapers is shrinking, and in Indonesia, where its distributor policy was revised as the local main distributor scaled back its business.」

「During the six-month period ended the second quarter of the current fiscal year, there were no new business or other risks, and no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「During the cumulative first quarter, there were no new business or other risks, nor any material changes to the business and other risks described in the previous fiscal year's securities report.」

「During the nine-month consolidated period, there were no new business or other risks, and no material changes to the business or other risks described in the annual securities report for the previous fiscal year.」

「During the six-month period ended the second quarter of the current fiscal year, there were no new business or other risks, and no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「As one of its growth strategies, the Group, led mainly by the Overseas Home & Personal Care Business Division, is pursuing business expansion primarily in China, South Korea, Russia and Southeast Asia. However, overseas business expansion carries risks of changes in the economic environment due to fluctuations in foreign exchange rates, regulations imposed by local governments, political instability and other factors.」

「However, sales value increased only slightly from the same quarter of the previous year due to the impact of the depreciation of local currencies at overseas operations.」

「In the overseas business, sales of baby diapers in China, South Korea, Thailand, Indonesia and Taiwan, where the Group has local operations, remained firm. Sales of adult diapers, feminine care products and wet products also grew, driving the expansion of the multi-category offering. As a result, total overseas sales volume increased from the same quarter of the previous year, but sales value in yen remained at roughly the same level due to the depreciation of local currencies at overseas operations.」

「In the overseas business, sales of baby diapers in China, South Korea, Thailand and Indonesia, where the Group has local operations, remained firm, and total overseas sales volume exceeded that of the same quarter of the previous year. However, due to the depreciation of local currencies at overseas operations, sales value in yen fell below the same quarter of the previous year.」

「As one of its growth strategies, the Group, led mainly by the Home & Personal Care Business Division, is pursuing business expansion primarily in China, South Korea, Russia and Southeast Asia. However, overseas business expansion carries risks of changes in the economic environment due to fluctuations in foreign exchange rates, regulations imposed by local governments, political instability and other factors, which may affect the Group's financial position and operating results.」