Business impact of the spread of novel coronavirus pneumonia

「Although the impact of COVID-19 on business activity has subsided, a global economic deterioration caused by the spread of a new infectious disease or other outbreak could lead to lower automobile sales, higher material prices or difficulty procuring materials, affecting the Group's results of operations and financial position. The Company will also prepare for a renewed spread of infection and work to strengthen its routine risk management framework.」

「During the nine-month period of the current consolidated fiscal year, restraint and restrictions on economic activity resulting from COVID-19 were almost fully lifted, and the Japanese economy was on a gradual recovery trend led by domestic demand. However, energy prices and overall prices continued to surge against a backdrop of the weaker yen and higher crude oil prices, among other factors, and the economy remained extremely difficult.」

「During the first half of the current consolidated fiscal year, restraint and restrictions on economic activity resulting from COVID-19 were almost fully lifted, and the Japanese economy was on a gradual recovery trend led by domestic demand. However, energy prices and overall prices continued to surge against a backdrop of the weaker yen and higher crude oil prices, among other factors, and the economy remained extremely difficult.」

「During the first quarter of the current consolidated fiscal year, restraint and restrictions on economic activity resulting from COVID-19 were almost fully lifted, and the Japanese economy was on a gradual recovery trend led by domestic demand. However, energy prices continued to surge against a backdrop of the weaker yen and higher crude oil prices, among other factors, and the economy remained extremely difficult.」

「Economic activity has continued to reopen and show signs of recovery in relation to COVID-19. However, if infections spread again and persist, lower automobile sales, higher material prices and difficulty procuring materials may result from a deterioration in the global economy, potentially affecting the Group's results of operations and financial position.」

「During the cumulative third-quarter period, although restrictions and stagnation in economic activity associated with the COVID-19 pandemic were gradually easing, energy prices and other prices rose sharply amid a weaker yen and higher crude oil prices, and economic conditions remained extremely challenging. Overseas, lockdowns originating from the COVID-19 pandemic occurred frequently in China, disrupting and hindering production and logistics worldwide, and the economic outlook remained uncertain.」

「The automotive industry, a major customer of our Group, remained in difficult conditions as production cuts by automakers continued due to the global semiconductor shortage, in addition to the impact of lockdowns and other factors related to COVID-19. It was also affected by material supply issues, higher prices and increased transportation costs. As a result, domestic production also declined year on year.」

「The automotive industry, our Group's principal customer industry, remained in a difficult environment. Production cuts by automakers continued due to the effects of lockdowns and other measures related to COVID-19 and tight global semiconductor supply, while the Group was also affected by material supply problems, higher prices and increased transportation costs associated with economic recovery. Domestic production units consequently declined from the previous year. Under these demand conditions, the Group accurately identified customer needs and continued to promote sales expansion globally. However, affected mainly by production cuts resulting from customers' reduced production due to COVID-19, net sales were ¥13,911 million, a decrease of ¥429 million, or 3.0%, from the previous fiscal year.」

「During the current consolidated fiscal year, the restraint and stagnation of economic activity in Japan resulting from COVID-19 gradually eased after the state of emergency was lifted in October of the previous year. However, personal consumption remained sluggish as priority preventive measures were declared again in January following the explosive spread of the Omicron variant. The economy remained extremely difficult against a backdrop of the sharp depreciation of the yen and higher crude oil prices stemming from the Russia-Ukraine conflict that emerged at the end of the fiscal year. Overseas, the Omicron variant spread earlier than in Japan in the United States, Europe and other regions, and the explosive increase in coronavirus infections in China from the beginning of the year disrupted production and logistics worldwide, leaving the economic outlook uncertain.」

「During the nine-month period of the current consolidated fiscal year, the restraint and stagnation of economic activity in Japan resulting from COVID-19 gradually eased after the state of emergency was lifted in October of the previous year. However, personal consumption remained sluggish, partly due to the recent rise in crude oil prices, and the economy remained extremely difficult as infections with the Omicron variant increased explosively in January. Overseas, the Omicron variant spread earlier than in Japan in the United States, Europe and other regions, and the economic outlook remained uncertain as continued increases in infections disrupted production and logistics.」

「During the first half of the current consolidated fiscal year, the Japanese economy remained extremely difficult as personal consumption deteriorated significantly due to the restraint and stagnation of economic activity resulting from the effects of COVID-19, which continued from the previous fiscal year. However, the number of coronavirus infections began to decline in September, and the declaration of a state of emergency was lifted from October onward, raising expectations of a gradual economic recovery. Overseas economies were also affected by the explosive spread of coronavirus variants, as in Japan, but have been gradually recovering due in part to the progress of COVID-19 vaccinations.」

「During the first quarter of the current consolidated fiscal year, the Japanese economy remained extremely difficult as personal consumption deteriorated significantly due to the restraint and stagnation of economic activity resulting from the effects of COVID-19, which continued from the previous fiscal year. Overseas, the economy has been gradually recovering as COVID-19 vaccinations progress, but the outlook remains uncertain due to explosive spread of coronavirus variants and other factors.」

「If the situation involving COVID-19 does not subside and further spread of infection or a pandemic develops, the resulting deterioration in the global economy may lead to lower automobile sales, higher material prices and difficulty procuring materials, which could affect the Group's results of operations and financial position.」

「Overseas, the economy has been gradually recovering in China as the number of coronavirus infections has been brought under control, but the spread of infections continues in the United States, Europe and other regions, and the outlook remains uncertain.」

「Overseas, the Chinese economy has been gradually recovering as the number of coronavirus infections has been brought under control, but the outlook remains uncertain as a second wave of infections has arrived in the United States, Europe and other regions worldwide. In terms of profit, the Company pursued further rationalization, but operating profit was a loss of ¥3 million, compared with operating profit of ¥3,644 million in the same period of the previous year, due mainly to a decline in marginal profit resulting from lower revenue. Ordinary profit was ¥700 million, down 82.5% year on year, and profit attributable to owners of the parent was ¥483 million, down 84.5% year on year.」

「In assessing the recoverability of deferred tax assets and conducting impairment tests for property, plant and equipment and other fixed assets, the Company has made accounting estimates based on the assumption that the effects of the spread of COVID-19 in Japan and overseas would continue through the first half of the current consolidated fiscal year and gradually return to normal from the second half onward, reflecting the actual results at the time in the initial business plan. Future results may differ from these estimates and assumptions. In addition, the demand environment in the automotive market has become extremely uncertain due to declines in automobile production and production shutdowns in Japan and overseas resulting from the spread of COVID-19, significantly affecting the Group's automotive-related and other businesses. Restrictions on movement resulting from lockdowns and other measures in various countries have also had direct effects, including the suspension of operations at some plants of the Group's companies.」

「The demand environment in the automotive market has become extremely uncertain due to declines in automobile production and production shutdowns in Japan and overseas resulting from the spread of COVID-19, significantly affecting the Group's automotive-related and other businesses. In addition, restrictions on movement resulting from lockdowns and other measures in various countries have had direct effects, including the suspension of operations at some plants of the Group's consolidated companies.」

「The Company will continue to closely monitor the impact on its business of the spread of COVID-19 pneumonia, which originated in Wuhan, China, and became apparent from January 2020.」