Supply Disruptions and Price Increases for Raw Materials and Components

「Although production adjustments by the automotive manufacturers that are its customers continued, demand was on a gradual recovery trend compared with the previous corresponding period, when component shortages had a significant impact. As a result, revenue remained firm and the operating loss narrowed.」

「In production, as the impact of component shortages and higher material costs continued, the company worked to stabilize production through advance orders, procurement of alternative products and a review of its production structure.」

「As the impact of difficulties procuring components and higher material costs continued, the company worked to stabilize production and reduce costs through advance orders and the procurement of alternative products. In addition, the company revised the selling prices of machine tools and various options to address higher raw material prices and other cost increases.」

「Although orders remained firm, revenue and operating profit both declined due to the impact of difficulties procuring components and higher raw material prices, as well as increased depreciation and other expenses following the start of operations at the Asahi Plant.」

「Revenue was affected by the prolonged component procurement problems and lower-than-planned performance by the group’s Chinese subsidiaries due to China’s lockdowns. Profit was affected by higher raw material prices, increased selling, general and administrative expenses following the resumption of sales activities, and higher depreciation and other expenses following the start of operations at the Asahi Plant.」

「In the machine tool industry, the group's main business area, industry orders in FY2021 totaled ¥1,667.5 billion, up 68.7% from the previous year. Overseas orders reached a record ¥1,101.2 billion, exceeding the FY2017 level. At the same time, production and shipments continued to be affected by component shortages and higher raw material prices and logistics costs.」

「Production and shipments continued to be affected by higher material costs, component shortages and container shortages, among other factors.」

「The company is working to conduct appropriate procurement activities and maintain appropriate inventory levels by strengthening cooperation with suppliers through measures such as promoting dual sourcing and placing advance orders for long-lead-time items.」

「The group is working to conduct appropriate procurement activities and maintain appropriate inventory levels by strengthening cooperation with suppliers through measures such as promoting dual sourcing and placing advance orders for long-lead-time items.」

「In production, the Group continued operating at full capacity while working to improve productivity. However, the supply of key components became unstable as demand increased, resulting in delays in production progress for part of the plan.」

「On the production side, we improved productivity and responded with full production while demand remained high. However, rising demand disrupted the stable supply of key components, causing production delays in part of the plan.」

「Meanwhile, the continuing difficulty in resolving the shortage of component parts remained one of the risk factors.」

「This projected amount is exceptionally high, exceeding the calendar 2017 actual result, which set a record high for the first time in 10 years, and concerns have been raised that difficulty procuring component parts could affect delivery times and procurement costs.」

「If the prices of raw materials and other items surge more than expected or remain high for an extended period due to factors such as surging crude oil prices and economic growth in emerging economies, the resulting increase in manufacturing costs may reduce the Group's earnings.」

「If supplies from business partners are interrupted or shortages arise due to a sudden increase in product demand, it may be difficult to change suppliers or switch to substitute products. This could significantly affect production and, in turn, the financial condition and operating results of the Group.」