Economic and Cost Uncertainty from the Situation in Ukraine and Surging Energy Prices

「During the fiscal year, the global economy remained unstable due to the effects of policy changes, including higher US tariff rates, trends in policy interest rates in Europe and the United States, major fluctuations in foreign exchange and equity markets, stagnating economic growth in China, and the emergence of geopolitical risks, including tensions in the Middle East.」

「For the overall business environment in FY2026, we expect uncertainty and opacity in global political and economic trends to remain pronounced, led by geopolitical risks including the situation in the Middle East.」

「During the six-month period ended in the interim reporting period, the global economy remained unstable due to the effects of policy changes, including higher US tariff rates, trends in policy interest rates in Europe and the United States, major fluctuations in foreign exchange and equity markets, and stagnating economic growth in China. The domestic economy was generally on a moderate recovery trend, but conditions remained difficult to view optimistically due to continued price increases, downward pressure resulting from changes in the global economic environment, and the effects of US trade policies, particularly on the automotive industry.」

「Although the domestic economy continued to recover moderately, an environment that could not be viewed optimistically persisted due to rising prices and downside risks to the global economy.」

「During the first quarter of the fiscal year, the global economy was generally on a recovery path, but uncertain and unstable conditions continued due to the effects of global monetary tightening and persistently high costs, including raw material and energy prices, associated with geopolitical conditions.」

「During the fiscal year, the global economy continued to face an uncertain and unstable environment. Although recovery from the impact of COVID-19 progressed, the economy was affected by global monetary tightening, higher energy prices associated with geopolitical conditions and the emergence of financial instability toward the end of the fiscal year.」

「During the nine-month period ended in the third quarter, the global economy showed signs of recovery from the impact of COVID-19 variants in developed countries. However, since last autumn, the recovery has slowed due to the effects of higher energy prices associated with global monetary tightening and geopolitical conditions.」

「During the first 2 quarters of the fiscal year, the global economy moved toward recovery from the impact of COVID-19 variants in developed countries, but downside risks materialized due to the effects of global monetary tightening and higher energy prices associated with geopolitical conditions.」

「As an automotive exhaust component, the diesel particulate filter (DPF) saw both sales and operating income decrease from the same period of the previous year. This was despite efforts to improve the productivity of high-performance products and shift orders toward products for heavy commercial vehicles, as vehicle production declined due to the semiconductor shortage and the business was affected by higher raw material and energy prices.」

「The situation became unstable due to the resurgence of infections caused by variants since the end of last year, as well as higher raw material and energy prices, with Russia's invasion of Ukraine adding further pressure.」