Higher Procurement Costs Due to Yen Depreciation

「しかしながら、当第３四半期連結累計期間におきましても、世界情勢の不透明感や大幅な円安に伴う原材料価格高騰の影響等を受け、十分な収益力の回復および財務体質の改善に至らない状況が続いております。」

「Foreign exchange gains — ¥11.999 million」

「In the financial results for the first quarter of the fiscal year ending November 2026, the Company recorded foreign exchange gain of ¥12,321 thousand as non-operating income.」

「Foreign exchange loss: ¥4.960 million (¥13.777 million in the previous consolidated fiscal year)」

「Foreign exchange losses ¥11.907 million ¥13.777 million」

「Foreign exchange gains — 3,889」

「Foreign exchange losses 26,244 6,906」

「Foreign exchange losses － 11,907」

「Foreign exchange losses － 11,436」

「Foreign exchange losses 28,378」

「On the earnings side, the cost of sales ratio increased due in part to higher costs for purchased products, and the operating loss, ordinary loss and quarterly net loss attributable to owners of the parent all increased from the same quarter of the previous year.」

「The cost of sales has risen due to the weaker yen, while selling, general and administrative expenses have increased because of the organizational restructuring, delaying the recovery in earnings. The cost of sales ratio to net sales was 69.0% (62.9% in the previous consolidated fiscal year), an increase of 6.1 percentage points.」

「During the six months ended the second quarter of the fiscal year under review, the Japanese and global economies were moving toward normalization of social and economic activity as the number of COVID-19 cases was brought under control and activity restrictions were eased. However, the outlook for the economy became increasingly uncertain due to exchange-rate volatility caused by the sharp depreciation of the yen and rising prices of resources and other commodities stemming from the situation in Russia and Ukraine.」

「The company endeavors to mitigate the impact of exchange rate fluctuations through foreign exchange forwards and negotiations with business partners, but may be unable to mitigate that impact in the event of sharp exchange rate movements or other circumstances.」

「The company endeavors to mitigate the impact of exchange rate fluctuations through foreign exchange forwards and negotiations with business partners, but may be unable to mitigate that impact in the event of sharp exchange rate movements or other circumstances.」

「However, the business environment for the Group has become increasingly challenging, due in part to higher procurement costs resulting from the weaker yen.」

「The cost of sales ratio to revenue was 67.0% (67.7% in the previous consolidated fiscal year), a decline of 0.7 percentage points. This was mainly because the stronger yen than in the previous period reduced the purchase prices of items procured overseas.」

「In terms of profit, gross profit remained sluggish relative to the increase in net sales, due in part to higher costs resulting from the time required to transfer and consolidate production from subcontractors at the Kagawa Plant. However, reductions in expenses and foreign exchange gains, among other factors, reduced the amounts of the operating loss, ordinary loss and net loss attributable to owners of the parent compared with the same quarter of the previous year.」

「The cost-of-sales ratio was 67.7%, compared with 64.5% in the previous consolidated fiscal year, an increase of 3.2 percentage points. The main factor was an increase in the purchase prices of overseas-sourced products resulting from the yen’s depreciation.」

「In addition to the decline in revenue described above, procurement costs increased because the foreign exchange forward rates applicable to the Company moved at weaker yen levels than in the same quarter of the previous year.」

「Procurement costs increased because the forward exchange rates applicable to the Company remained at weaker-yen levels than in the same quarter of the previous year.」