Soaring raw material prices

「Although raw material prices continued to rise and energy costs remained high, profit increased year on year owing to the significant effect of higher sales and the initial effects of selling price revisions for certain products.」

「The company is taking measures such as resetting selling prices in response to rising costs. Although it has also been affected by raw material price increases that outpaced these measures and by higher production costs for certain complex products, profit increased year on year owing to the effect of higher sales.」

「Higher raw material prices have raised the cost ratio and reduced profit. In particular, the aerospace and defense segment has many projects with long lead times from order receipt to delivery, making it difficult to reflect post-contract increases in raw material prices in selling prices.」

「In Japan, persistently high raw material prices and energy costs, concerns over declining demand owing to inflation, and worsening labor shortages continue. Along with the impact of monetary policy in other countries and prolonged geopolitical risks, these factors leave the economy facing conditions that cannot be viewed optimistically.」

「Although soaring raw material prices and other factors continued to have a significant impact on profit, profitability improved substantially owing to the securing of sales and an improved cost ratio resulting from higher factory utilization.」

「Although the effects of higher raw-material prices and elevated energy costs remained significant, gross profit increased substantially, driven by the maintenance of net sales and an improvement in the cost ratio resulting from higher plant utilisation.」

「In terms of profit, although the effects of higher raw-material prices and energy costs remained significant, gross profit increased substantially, driven by a significant increase in sales in the Firefighting and Disaster Prevention segment and an improved cost ratio resulting from higher plant utilisation in the Aerospace and Industrial Products segment.」

「During the consolidated fiscal year, Japan’s economy showed signs of recovery, particularly in the domestic non-manufacturing sector, as the impact of COVID-19 subsided. Meanwhile, energy and raw material prices continued to rise owing to the prolonged situation in Ukraine, inflation and monetary policy in Europe and the United States, and the yen’s depreciation. Although pass-through to selling prices progressed, corporate earnings and household finances remained under pressure.」

「During the nine-month period ended the third quarter, Japan’s economy continued to recover under the new normal of living with COVID-19. However, raw material and energy prices rose, and inflation continued, owing to the prolonged situation in Ukraine, inflation and monetary policy in Europe and the United States, and the weaker yen.」

「During the six-month period ended the second quarter, Japan’s economy continued to recover as efforts were made to contain the spread of COVID-19 while balancing social and economic activity. However, raw material prices have risen owing to the situation in Ukraine, inflation and monetary policy in Europe and the United States, and the sharp depreciation of the yen, and the economy continues to face concerns that higher costs will persist and pressure earnings.」

「Resource and material prices have risen owing to the situation in Ukraine and the yen’s downward trend, and the company continues to face concerns that higher costs, particularly in manufacturing, will persist over the long term.」

「The cost of sales ratio deteriorated from 80.3% in the previous fiscal year to 83.7% in the current fiscal year, while selling, general and administrative expenses also rose as a percentage of net sales from 16.9% to 17.8%. As a result, the company was unable to avoid the impact of lower sales.」

「Looking ahead, although there are signs that the semiconductor shortage is easing, many destabilizing factors remain for economic activity, including soaring energy and raw material prices, disruption to global logistics services, and the resurgence of COVID-19, leaving little room for optimism.」

「Looking ahead, although concerns remain over semiconductor shortages and soaring raw material prices against the backdrop of a recovering global economy, disruptions in the supply of parts from Southeast Asia, where COVID-19 infections continued to spread, and a further resurgence of COVID-19, demand is expected to recover and business conditions improve as vaccination progresses.」

「The company seeks to reduce costs in response to fluctuations in crude oil and metal material prices by purchasing materials in lots and managing inventories appropriately. However, if these prices rise sharply, there is a limit to passing the increases on to selling prices, which could affect operating results and financial condition through higher costs and increased payments.」

「Although there were factors increasing costs, such as requests for higher material prices and rising personnel expenses, improvements in production efficiency and the results of price negotiations limited the increase in the cost of sales to 0.6% year on year, broadly in line with the increase in net sales.」

「The economy is believed to have remained firm, partly because the impact of the natural disasters during the summer subsided and crude oil prices entered a downward trend.」

「During the six-month period ended the second quarter, Japan’s economy appears to have remained broadly flat, with manufacturing companies’ earnings fluctuating within a narrow range, owing to rising crude oil and raw material prices as well as the impact of natural disasters.」

「During the cumulative period of the first quarter of the current consolidated fiscal year, Japan's economy showed a pause in the improvement of corporate earnings, particularly in manufacturing, due to the end or slowdown of product demand and rising crude oil and raw material prices. However, capital investment plans aimed at automation and labor saving, supported by labor shortages, are viewed as firm, and the economy is expected to remain on a gradual recovery track.」

「If crude oil and metal material prices rise sharply and the increase cannot be passed on to product prices, the group's operating results and financial position may be affected.」

「In Japan, labor shortages remain severe, while overseas, conditions continue to warrant caution regarding the outlook, including policy developments in various countries, concerns about economic slowdowns in emerging markets, and rising resource and material prices.」

「The products of the group mainly consist of processed materials derived from crude oil and other primary commodities, as well as metal materials. If crude oil and metal material prices rise sharply and the increase cannot be passed on to product prices, the group's operating results and financial position may be affected.」