Risk of Surging Raw Material Prices and Difficulty Passing Through Costs

「Persistently high raw material and energy prices amid rising inflation and labor shortages, as well as heightened tensions in the Middle East stemming from the conflict in Ukraine and attacks on Iran by the United States and Israel」

「ウクライナ紛争や米国およびイスラエルによるイラン攻撃に端を発した中東情勢の緊迫化を背景とした原材料・エネルギー価格の高止まり」

「Overall, the trend of higher costs driven by raw materials, labor and other factors continues.」

「Regarding gross profit on completed construction contracts, profit margins generally declined in the bridge division of the steel structures manufacturing business due to higher material and labor costs and other factors.」

「The reinforcing bar and building materials division recorded lower sales and lower profit year on year due to lower sales volumes resulting from weak domestic construction demand for reinforcing bar materials and lower transaction volumes for general steel products.」

「The reinforcing bar and building materials division recorded lower profit due to declining demand for reinforcing bars resulting from weaker demand for foundation and formwork construction for housing and other projects, as well as thinner margins caused by higher purchase costs resulting from rising raw material prices.」

「The reinforcing bar and building materials division recorded higher sales but lower profit year on year, as soaring purchase prices for reinforcing bar materials had a significant impact.」

「The reinforcing bar and building materials division recorded higher sales but lower profit year on year because purchase prices for reinforcing bar materials continued to rise.」

「The reinforcing bar and building materials division recorded higher sales but lower profit year on year as material prices continued to rise. As a result, sales were ¥880 million, up 8.3% year on year, and the operating loss was ¥3 million, compared with operating income of ¥40 million in the same period of the previous year.」

「In the thick plate division, sales increased as transaction volumes for major bridge and structural steel materials recovered, but inventory valuation losses resulting from soaring purchase prices for raw steel reduced operating profitability.」

「During the cumulative third quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that management recognizes could materially affect the financial position, operating results and cash flows of the consolidated companies, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「In the thick plate division, profitability improved due to the recovery in transaction volumes with the Company and soaring steel prices. In the leveler division, the upward trend in processing volumes that began in the second half of the previous consolidated fiscal year continued.」

「In the thick plate division, lower processing transaction volumes due to the Company's postponement of construction schedules and inventory valuation losses resulting from a sharp rise in steel prices in the second half of the fiscal year affected profit and loss.」

「In addition to higher reinforcing bar prices resulting from higher scrap prices, demand for civil engineering materials continued to trend upward in the reinforcing bar and building materials division. As a result, sales were ¥1,460 million, down ¥830 million, or 36.3%, year on year, and the operating loss was ¥10 million, compared with an operating loss of ¥40 million in the same period of the previous year.」

「During the cumulative second quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that management recognizes could materially affect the financial position, operating results and cash flows of the consolidated companies, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the cumulative second quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that management recognizes could materially affect the financial position, operating results and cash flows of the consolidated companies, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the three-month period ended 30 June, there were no new risks that management recognizes as having the potential to materially affect the financial position, operating results or cash flows of the consolidated companies, and no material changes to the business risks described in the annual securities report for the previous fiscal year.」

「In the materials sales business, sales in the thick plate division were slightly below those in the previous consolidated fiscal year, but operating income improved as purchase costs declined. In the reinforcing bar and building materials division, sales increased slightly and operating income rose slightly due to lower purchase costs.」

「During the cumulative third quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that could materially affect investors’ decisions, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「In the materials sales business, both the thick plate division and the reinforcing bar and building materials division recorded higher sales, reflecting increased materials transaction volumes with the Company in the first quarter. Sales rose to ¥1,790 million, up ¥360 million, or 25.8%, year on year, while operating income was ¥6 million, compared with an operating loss of ¥10 million in the same period of the previous year, partly due to higher purchase costs.」

「During the first three months of the consolidated fiscal year, there were no material changes concerning matters described in the quarterly securities report that could materially affect investors' decisions, or to the business and other risks described in the securities report for the previous fiscal year.」

「In the thick plate division, sales increased slightly as the volume of transactions with the Company rose slightly, but operating income declined significantly due to higher purchase costs and other factors. As a result, the materials sales business recorded sales of ¥3,410 million, up ¥230 million, or 7.3%, year on year, and an operating loss of ¥7 million, compared with operating income of ¥80 million in the same period of the previous year.」

「During the first three months of the consolidated fiscal year, there were no material changes concerning matters described in the quarterly securities report that could materially affect investors' decisions, or to the business and other risks described in the securities report for the previous fiscal year.」

「In the reinforcing steel and construction materials segment, sales volumes of reinforcing steel increased slightly, while both sales volumes and sales value increased due to the contribution from higher raw material prices and increased sales of structural steel materials and civil engineering products.」

「In the reinforcing steel and construction materials segment, market prices rose as scrap prices increased, resulting in higher net sales and cost of sales, while operating profit remained broadly flat.」

「In the reinforcing steel and construction materials segment, sales volumes increased from autumn onward due to higher scrap prices and increased demand during the peak season for civil engineering materials. As a result, the materials sales business recorded net sales of ¥2.17 billion, down ¥1.31 billion, or 37.6%, year on year, and an operating loss of ¥10 million, compared with operating profit of ¥70 million in the same period of the previous year.」

「In the leveler business, processing volumes declined due to the effects of the Kumamoto Earthquake and other factors. In the reinforcing steel and construction materials segment, steel prices fell as scrap prices declined, while sales volumes decreased due to weak demand for construction materials. As a result, the materials sales business recorded net sales of ¥1.53 billion, down ¥730 million, or 32.3%, year on year, and an operating loss of ¥8 million, compared with operating profit of ¥40 million in the same period of the previous year.」

「In the reinforcing steel and construction materials segment, lower steel prices than in the previous fiscal year led customers to hold back on purchases and to lower unit prices, causing sales volumes to fall substantially. As a result, the materials sales business recorded net sales of ¥630 million, down ¥590 million, or 48.3%, year on year, and an operating loss of ¥10 million, compared with operating profit of ¥20 million in the same period of the previous year.」

「If market prices for raw materials and other inputs surge and the Company is unable to pass the increase through to selling prices and other charges, this may affect operating performance.」