Sharp slowdown in the global and Japanese economies due to the spread of COVID-19

「During the first 3 months of the current consolidated fiscal year, personal consumption in Japan remained on a recovery trend due to the reclassification of COVID-19 as a Class 5 infectious disease and the implementation of substantial wage increases.」

「In Japan, as COVID-19 is gradually coming under control, conditions are emerging in which a recovery in socioeconomic activity can be expected.」

「There have been no material changes to the assumptions, including the future spread and timing of containment of COVID-19, described in the previous consolidated fiscal year's securities report under Additional Information (Accounting Estimates Relating to the Impact of the Spread of COVID-19).」

「During the cumulative second quarter under review, the Japanese economy remained on a recovery trend as personal consumption recovered with the easing of various restrictions on activities, despite upward pressure from rising prices and supply constraints.」

「In the global economy, the prolonged conflict in Ukraine and lockdowns in Chinese cities are accelerating global inflation.」

「In Japan, the number of COVID-19 infections, which had begun to subside in 2021, started rising again from the beginning of 2022, making it difficult to be optimistic about a recovery in economic activity following the containment of the infection.」

「During the first 9 months of the current consolidated fiscal year, the Japanese economy moved back and forth due to sluggish consumption caused by repeated declarations of a state of emergency and supply constraints affecting parts and raw materials. Although the economy is currently on a recovery trend against the backdrop of eased activity restrictions, the outlook remains uncertain.」

「Meanwhile, in Southeast Asian countries where vaccination rollout has lagged, the inability to contain the spread of COVID-19 has constrained economic activity and contributed to global supply-chain disruptions.」

「During the first 3 months of the current consolidated fiscal year, external demand in Japan remained firm as exports, mainly to the United States and China, increased. However, domestic demand deteriorated and lacked strength due to stricter measures to prevent the spread of COVID-19 in Japan. Overseas, economies were moving toward normalization as vaccinations progressed in China, Europe, the United States and other countries, but supply shortages of semiconductors, shipping containers and other items constrained production activity. The extent and pace of recovery therefore varied by region, industry and business type.」

「Although vaccination with vaccines based on new technologies began in some areas in 2021, it will still take time for economic activity in Japan to return to pre-2020 levels, and the outlook for the global economy remains extremely difficult to foresee.」

「While the worldwide spread of COVID-19 continues, countries are working to restore their economies. In the automotive market, which accounts for approximately 40% of Group sales, production in Japan, China and other countries and regions is entering a recovery phase. Although progress remains below the prior-year level, profit during the 3 months of the third quarter recovered to a level above that of the same period of the previous year.」

「During the first 6 months of the current consolidated fiscal year, the global economy deteriorated rapidly under the impact of the worldwide spread of COVID-19, and the situation continues. The Group was affected by the suspension of operations and production cuts by automotive-parts manufacturers, its major customers, in countries around the world. Net sales were ¥11,348 million, down 16.2% year on year; operating income was ¥100 million, down 84.5%; and ordinary income was ¥58 million, down 92.1%.」

「During the first three months of the current consolidated fiscal year, the global economy was forced to deteriorate rapidly due to the impact of the spread of COVID-19. This situation continues. Under these conditions, the Group was affected by the suspension of operations and production cuts by automotive-parts manufacturers, its major customers, in countries around the world. Net sales were ¥5,884 million, down 13.2% year on year, and operating income was ¥142 million, down 54.0% year on year.」

「The global economy, which had been weak since last year due to the slowdown in the Chinese economy caused by US-China trade friction and other factors and falling crude oil prices, underwent a sharp slowdown as the spread of the novel coronavirus infection grew. In Japan, as domestic automobile production was beginning to show signs of weakening, exports declined and capital investment fell due to the impact of the novel coronavirus infection both domestically and overseas, strengthening the sense of stagnation, while corporate earnings are also expected to deteriorate.」