Worsening Business Sentiment and a Challenging Operating Environment

「During the fiscal year, Japan's economy was generally on a recovery trend. However, the prolonged Russian invasion of Ukraine, heightened geopolitical risks in Latin America and the Middle East, and the current global situation, including US trade policy, caused resource and energy prices to rise and fluctuate. Inflation, interest rates, foreign exchange, and other factors created a serious and uncertain outlook that affected economic activity.」

「The situation remains serious due to the protracted situation in Ukraine and geopolitical risks in the Middle East. The outlook remains uncertain and the operating environment is complex and extremely difficult to forecast, owing to soaring crude oil and energy prices and their impact on economic activity.」

「During the interim accounting period, Japan's domestic economy showed a moderate recovery, supported by improvements in employment and income conditions and an increase in visitors from overseas. However, uncertainty about the outlook continued due to higher resource and raw material prices associated with geopolitical risks such as the situations in Ukraine and the Middle East, as well as the impact of US trade policy and volatility in financial and capital markets.」

「The issue of additional tariffs based on the America First policy following the Trump administration's inauguration in January, and the resulting escalation of US-China tensions, could intensify downward pressure on economies in Japan and other Asian countries, potentially causing an economic downturn.」

「During the interim accounting period, Japan's economy was on a moderate recovery trend, supported by the normalisation of social and economic activity, improvements in employment and income conditions, and an increase in visitors to Japan. However, uncertainty about the outlook continued due to soaring energy and resource prices caused by unstable international conditions, inflation resulting from higher labor and logistics costs, and the effects of financial-market volatility. As inventory adjustments progressed in the company's core electronic components industry amid stagnation in China's economy, revenue was in line with the initial forecast and profit was improving, but results for the interim accounting period fell short of the initial forecast, regrettably.」

「The prolonged situations in Ukraine and the Middle East have intensified geopolitical risks, driving up raw material and energy prices and inflation. Together with persistently high costs, including labor costs, this has created an overall difficult environment in which the outlook is extremely difficult to predict and the business environment is becoming increasingly complex.」

「During the third quarter, Japan's economy saw more active economic activity following the reclassification of COVID-19 as a Class 5 disease, with bright signs including a significant recovery in private consumption and inbound demand. At the same time, amid efforts to pass on soaring energy and raw material prices resulting from the prolonged situation in Ukraine and heightened tensions in the Middle East, the electronic components industry, the company's main customer base, experienced generally sluggish orders due in part to the downturn in China's economy caused by its property slump. We judge that this impact will continue through the first half of the following fiscal year.」

「During the six-month period ended at the second quarter, Japan's economy was moving toward a recovery in social and economic activity as COVID-19 restrictions were eased, but uncertainty about the outlook continued due to soaring energy and raw material prices, foreign-exchange fluctuations and the prolonged situation in Ukraine, among other factors,」

「During the first quarter, Japan's economy remained in a situation requiring close monitoring. The transition of COVID-19 to Category V led to the removal of restrictions on activities, further improvements in consumer sentiment and normalization of economic activity, while there were also positive signs such as rising wages and improving employment conditions. However, uncertainty remained due to the strained relationship between the United States and China, the prolonged Russian invasion of Ukraine, and a decline in demand, including inventory adjustments in the Company's main electronic components market.」

「While supplies of electronic components, including semiconductors, and materials remained critically tight worldwide, the prolonged Russian invasion of Ukraine, soaring raw material and energy prices, and sharp exchange-rate fluctuations raised concerns about inflation. Conditions therefore remained uncertain and far from assured.」

「During the cumulative third quarter, uncertainty increased due to the prolonged Ukraine crisis, worsening US-China friction, and sharp fluctuations in foreign exchange rates, leaving the situation far from assured.」

「During the cumulative second quarter, soaring energy and raw material prices caused by unstable conditions in Japan and overseas forced margins lower, creating an overall difficult environment. However, the pass-through to selling prices gradually took hold, and stable order conditions also contributed to results substantially exceeding the earnings forecast. Nevertheless, the situation remained far from assured due to the prolonged Ukraine crisis, worsening US-China friction, and concerns about accelerating global inflation, and further impacts were expected.」

「During the first quarter, while there were positive signs such as recovering consumption and inbound demand as Japan sought to balance COVID-19 prevention with economic activity, continued concern over soaring resource and energy prices due to the worsening and prolongation of the situation in Ukraine was expected to have an increasingly pronounced impact. The electronic components industry, the company's main customer base, remained firm, partly due to yen depreciation, and the company's order environment also remained stable.」

「During the cumulative third quarter, economic and consumption activity was beginning to normalise following the lifting of the state of emergency for COVID-19. Although the economy was recovering gradually, market conditions in the electronic components industry, the company's main business, remained favourable.」

「During the first quarter, Japan's economy remained under a state of emergency due to the spread of COVID-19, with business activity subject to certain restrictions. Amid continued uncertainty and the unresolved US-China trade issue, the outlook remained highly uncertain and far from assured.」

「During the fiscal year, conditions remained difficult and the outlook uncertain, amid the declaration of a state of emergency accompanying the spread of COVID-19, restrictions on business activity, rising uncertainty caused by the latest spread of the virus, the absence of a clear end to the pandemic, and US-China trade issues.」

「During the third quarter, Japan's economy was in severe conditions, with corporate activity constrained by various factors as a second wave of COVID-19 in the summer was followed by an even more severe third wave in the winter. Uncertainty remained over the timing of the pandemic's end and other matters.」

「During the second quarter, economic activity began to recover gradually following the nationwide lifting of the state of emergency. However, rising uncertainty associated with a second wave caused companies to curtail activity, forcing adjustments to capital investment and production. Restrictions on consumption to prevent infections and the unresolved US-China trade issue also made the outlook difficult to assess.」

「During the first quarter, Japan's economy was constrained by sluggish consumption and restrictions on economic activity following the government's declaration of a state of emergency as COVID-19 spread. Economic activity was expected to recover gradually following the lifting of the declaration nationwide, but the situation remained highly uncertain, with no room for complacency due to concerns about a possible second wave and the unresolved US-China trade issue.」

「As for the outlook, the global spread of COVID-19 depressed consumption and sharply reduced inbound visitors, significantly affecting domestic and overseas corporate activity. With economic damage from the postponement of the Tokyo Olympics, a sharp fall in share prices, and other factors impossible to quantify, the government's declaration of a state of emergency and its extension further constrained economic activity and affected the future course of the economy.」

「During the cumulative third quarter, Japan's economy remained deeply stagnant. Corporate earnings were under severe pressure, particularly because declining exports weighed on manufacturing activity and led to inventory adjustments. As uncertainty increased against the backdrop of US-China trade friction and geopolitical risks, conditions were expected to remain difficult.」

「During the cumulative second quarter, the effects of US-China trade friction became more pronounced, and corporate earnings remained uneven due to declining exports and stagnant domestic demand. Although the outlook remained far from assured, capital investment in rationalisation, labor saving, and the renewal and maintenance of facilities was considered firm, despite slower growth.」

「During the cumulative first quarter, Japan's economy remained uneven, as in the second half of the previous fiscal year, with corporate earnings affected by declining exports due to US-China trade friction and the resulting stagnation in domestic demand. Although the outlook was uncertain, companies' propensity to invest remained firm against the backdrop of increasingly severe labor shortages and efforts to address work-style reforms, and the economy remained resilient.」

「However, exports stagnated amid concerns over trade friction between the US and China, capital investment was sluggish, and the slowdown in external demand affected corporate performance. In the fiscal year ending March 2020, order conditions were generally weak, particularly in the electronic components industry, and production was expected to be at or below the level of the fiscal year ended March 2019. Accordingly, with great regret, we revised our earnings forecast to lower revenue and lower profit.」

「During the cumulative third quarter, Japan's economy remained firm, supported by strong corporate earnings and improvements in employment and income conditions. Although the outlook remained uncertain due to the economic impact of conflicts among countries over the Trump administration's protectionism and economic slowdowns in the US, China, and elsewhere, corporate earnings were generally strong. Capital investment was also expected to continue, particularly investment in upgrading production facilities and labor-saving investment to address labor shortages.」

「Although there were risks to the economy from conflicts among countries over the Trump administration's protectionism, as well as geopolitical risks involving the Middle East and North Korea, the economy was generally on a recovery trend.」

「During the cumulative first quarter, Japan's economy continued to recover moderately, with corporate earnings improving on the back of firm external demand and consumption recovering as employment conditions and personal income improved. Although concerns remained about higher costs caused by rising crude oil prices and US trade policy, the economy continued on a moderate recovery trend.」

「Although there were geopolitical risks, including higher raw material prices and the North Korea issue, the economy followed a gradual upward trend throughout the year.」

「During the cumulative third quarter, in addition to the recovery in inbound demand, the expansion of overseas economies led to improved corporate earnings, particularly among export industries, while capital investment remained firm. Although risk factors included sluggish wage growth due to the decline in the labor share of income and overseas political conditions, the economy continued on a moderate recovery trend.」

「During the cumulative second quarter, inbound demand, which had temporarily weakened, also recovered. Supported by strong corporate performance, including expanding demand for automotive parts and smartphones, employment conditions and capital investment continued to improve. Although downside risks remained, including uncertainty over the Trump administration's policies and the political situation in North Korea, the economy continued on a moderate recovery trend.」

「During the cumulative first quarter, Japan's economy continued to recover moderately, while corporate earnings remained firm. Although the situation remained uncertain, including due to rising share prices and an improvement in the effective job-offers-to-applicants ratio, the economy continued to recover.」

「During the cumulative third quarter, although private consumption lacked strength, exports gradually recovered amid a weaker yen and higher share prices following the US presidential election. While uncertainty about the outlook remained, corporate earnings generally bottomed out and the economy was on a recovery trend.」

「During the cumulative second quarter, Japan's economy was affected by a worldwide stock-market decline and a stronger yen that continued from the start of the year, as well as the Kumamoto earthquakes in April. The UK's June referendum decision to leave the EU further accelerated yen appreciation, and weakness in current-year results continued, particularly among export industries.」

「During the cumulative first quarter, Japan's economy was marked by sluggish consumption and a pronounced sense of stagnation. As the economy remained stalled, the quarter ended with a stronger yen and lower share prices following the UK's referendum decision in late June to leave the EU.」

「Business sentiment, which had remained positive through last year, has changed completely even among major companies, and difficult conditions are expected.」