Business and Financial Impact of the Spread of COVID-19

「Disruption of the supply chains of customers and suppliers caused by major earthquakes, tsunamis, fires, pandemics and other events」

「Profit increased due to higher sales resulting from the easing of the impact of COVID-19 and customers' semiconductor shortages, as well as productivity improvements, appropriate sales price adjustments and lower air freight costs.」

「The Company assumes that the impact of the COVID-19 pandemic will be limited in the next consolidated fiscal year, while the effects of higher raw material and fuel prices and increased logistics costs resulting from the situation in Russia and Ukraine will continue for a certain period.」

「The automotive parts and battery businesses reported higher profit despite the impact of surging raw material and fuel prices, higher cost ratios, mainly labor costs, due to China's lockdown and changes in customers' production plans, and increased air freight costs incurred in the first quarter due to differences in the fiscal year-end of overseas subsidiaries with December year-ends. This was due to the product-mix effect from wire harnesses for new vehicle models and the elimination of temporary costs, mainly business continuity management and emergency transportation expenses, incurred in the third quarter of the previous fiscal year.」

「Although the automotive components business benefited from product-mix differences, including new wire-harness vehicle models, profit declined due to higher raw material and fuel prices, increased fixed costs from additional personnel associated with opening new locations, higher costs for BCM measures related to the previous year's Vietnam lockdown, a higher cost ratio resulting from China's lockdowns and changes in customers' production plans, and increased air freight costs for overseas subsidiaries with December year-ends due to the reporting-period mismatch, including costs incurred in the first quarter.」

「Profit declined due to delays in customer construction projects and lower operating levels at the Chinese subsidiary resulting from lockdowns in China caused by COVID-19.」

「In addition to lockdowns at some Southeast Asian locations caused by COVID-19 during the first half, profit declined from the autumn of the previous year due to lower factory operating rates caused by a resurgence of infections and higher emergency transportation costs incurred to fulfill the obligation to supply products to customers, resulting in lower profit.」

「Although demand recovery, led by automotive and electronics-related products, continued from the previous year, profit declined sharply in the automotive components business due to lockdowns at some Southeast Asian locations caused by COVID-19, lower attendance rates resulting from the spread of community transmission in some regions from late November, and increased BCM operating and emergency transportation costs in response.」

「Profit growth remained sluggish due to reduced production by customers in the automotive components business and the impact of lockdowns at some locations in Southeast Asia resulting from COVID-19.」

「The Group, comprising the Company, its consolidated subsidiaries and its equity-method affiliates, recovered significantly in the cumulative first quarter of the current fiscal year compared with the previous fiscal year, which was broadly affected by COVID-19. Sales and operating income increased in all segments, led by the Electric Power and Electronics segment.」

「Sales for the Group as a whole declined because sales growth was sluggish across the Company's businesses, including information and communications solutions, due to the impact of COVID-19, and because the transfer of the copper tube business and the restructuring of part of the magnet wire business resulted in these businesses being removed from the scope of consolidation.」

「The Group, comprising the Company, its consolidated subsidiaries and its equity-method affiliates, recorded lower sales and operating income in the cumulative second quarter of the current fiscal year. The impact of COVID-19, including reduced operations at overseas subsidiaries, was pronounced, particularly in the automotive components business of the Electric Power and Electronics segment and the energy infrastructure business of the Infrastructure segment.」

「The Group, comprising the Company, its consolidated subsidiaries and its equity-method affiliates, recorded lower sales and operating income in the cumulative second quarter of the current fiscal year. The impact of COVID-19, including reduced operations at overseas subsidiaries, was pronounced, particularly in the automotive components business of the Electric Power and Electronics segment and the energy infrastructure business of the Infrastructure segment.」

「The Electric Power and Electronics segment reported lower sales and operating income due to the impact of COVID-19, primarily in its automotive components business. In the Functional Products segment, although demand related to data centers was recovering, functional resin products for construction and automotive applications and copper foil for automotive batteries recorded lower sales and operating income.」

「At present, there is no prospect of the spread of the infection coming to an end, and depending on how the situation develops, it could have a significant impact on the business activities and financial condition of the Group as a whole. The Group has established an emergency response structure and will take necessary measures swiftly and flexibly while assessing changes in the environment and their impact on the Group.」