Prolonged COVID-19 Pandemic and Its Impact on Each Business

「Following the reclassification of COVID-19 as a Class 5 disease, restrictions on activities were lifted. However, if a new major infectious disease emerges on a scale exceeding the Group's expectations, business could be suspended or disrupted by supply-chain stoppages, including difficulties procuring raw materials, or the suspension of operations at business sites, potentially affecting the Group's operating results and financial position.」

「The overall moderate recovery continued, supported by a recovery in automotive production following the easing of supply constraints, solid domestic capital investment demand backed by high corporate earnings, and a recovery in personal consumption of face-to-face services such as dining out, lodging and entertainment. However, uncertainty continued due to persistently high raw-material and energy prices associated with the prolonged situation in Ukraine, a slowdown in the Chinese economy amid a weak real estate market, heightened tensions in the Middle East, and the impact of monetary tightening in Europe and the United States.」

「Although COVID-19 has gradually subsided, if infections spread again or a new major infectious disease emerges on a scale exceeding the Group's expectations, business could be suspended or disrupted due to supply-chain stoppages, including difficulties procuring raw materials, or the suspension of operations at business sites.」

「During the cumulative third-quarter period, the business environment surrounding the Group was generally on a moderate recovery track as economic activity normalized and recoveries continued in advanced economies. Domestic industrial production, particularly in the core automotive industry, was beginning to show signs of recovery. However, uncertainty continued due to soaring resource and energy prices associated with the prolonged situation in Ukraine and exchange-rate fluctuations resulting from US policy rate hikes.」

「During the first 6 months of the current consolidated fiscal year, the business environment surrounding our Group showed a gradual recovery as the impact of COVID-19 eased. Industrial production showed signs of recovery, including increased automobile production as supply constraints on semiconductors and other products eased. However, conditions remained uncertain due to the sharp depreciation of the yen against the dollar, the prolonged Russian invasion of Ukraine, and the spread of globally rising inflation and interest rates originating from soaring resource and energy prices in Europe.」

「During the cumulative first-quarter period, the business environment surrounding the Group remained difficult. The economy showed signs of recovery as the impact of COVID-19 eased, but industrial production was weak due to semiconductor shortages and the effects of lockdowns in China. Costs also rose as the yen depreciated sharply against the US dollar and crude oil prices surged following Russia's invasion of Ukraine.」

「During the fiscal year, Japan's economy was generally on a moderate recovery track as economic activity normalized and recoveries continued in advanced economies, despite factors including automotive production cuts caused by semiconductor shortages. However, uncertainty continued due to the renewed spread of COVID-19, concerns about a slowdown in the Chinese economy, and soaring raw-material and energy prices associated with the worsening situation in Ukraine.」

「During the cumulative third-quarter period, Japan's economy was generally on a moderate recovery track, as economic activity normalized and recoveries continued in advanced economies. However, the outlook remained uncertain, with concerns about a sixth wave of COVID-19 infections and a slowdown in the Chinese economy.」

「During the cumulative second-quarter period, Japan's economy showed a moderate recovery, but restrictions on economic activity continued as states of emergency and measures to prevent the spread of disease were imposed intermittently due to the fifth wave of COVID-19 infections. Some countries and regions around the world were also forced to strengthen infection-control measures, and the outlook remained uncertain.」

「The Group expects the uncertain situation caused by COVID-19 to continue. It will promote the stabilization and strengthening of its financial base by shifting to a new normal after COVID-19.」

「Personal consumption also benefited from economic stimulus measures implemented by the government and local authorities. However, infections described as the third wave continued to increase, and the reintroduction of a state of emergency from January was expected to restrain personal consumption. Conditions therefore remained difficult.」

「Personal consumption also showed signs of recovery due to government measures and other factors, but the risk of second and third waves of infections and deterioration in employment conditions are expected to restrain personal consumption.」

「Among the Company's major customers, the castings industry was in an extremely difficult situation overall. The automotive industry was heavily affected by declining domestic and overseas demand and supply-chain disruptions caused by factory shutdowns around the world, resulting in substantial production cuts. In the civil engineering and construction industry, new housing starts, which had already been trending downward, declined further.」

「The Group expects the impact of COVID-19 to continue for approximately 3 years. It will work to stabilize and strengthen its financial base by reviewing its capital expenditure plans, shifting to work practices using the web, and reducing expenses. In the castings business, revenue is expected to decline due to lower demand from the automotive industry.」