Risk of Failure to Achieve the Business Plan Due to Changes in the Solar Cell Market and Policies

「The global economic outlook has become more uncertain due to growing concerns over the economic outlook arising from reviews of monetary policy in major countries and policy changes in the United States, as well as concerns over higher crude oil prices resulting from rising geopolitical risks in the Middle East, including the situation in Iran. The situation surrounding Japan's economy therefore remains unpredictable.」

「The outlook for domestic and overseas economic conditions is expected to remain unpredictable due to the market impact of changes in monetary policy in countries around the world, including Japan, policy changes in the United States, prolonged instability in Ukraine and the Middle East, and uncertainty regarding the outlook for China's economy.」

「The global economy remains challenging and uncertain due to the prolonged Russia-Ukraine conflict, conditions in the Middle East, volatility in the financial and capital markets, and concerns over the outlook for China's economy.」

「Although the effects of COVID-19 have been largely resolved, the outlook for domestic and overseas economic conditions is expected to remain unpredictable due to the market impact of continued global monetary tightening, persistently high raw material and energy prices, concerns over prolonged instability in Ukraine and the Middle East, and uncertainty regarding the outlook for China's economy.」

「The global economy remained challenging due to the prolonged Russia-Ukraine situation, rising geopolitical risks in the Middle East, global inflation driven by persistently high raw material and energy prices, foreign exchange fluctuations resulting from continued monetary tightening policies, and slower growth due to China's property downturn and weak domestic and external demand. The global situation surrounding Japan's economy therefore remained unpredictable.」

「The global economy remained challenging due to the prolonged Russia-Ukraine situation, global inflation driven by persistently high raw material and energy prices, foreign exchange fluctuations resulting from continued monetary tightening policies, and an economic slowdown caused by weak domestic and external demand in China. The global situation surrounding Japan's economy therefore remained unpredictable.」

「The global economy remained uncertain due to the prolonged Russia-Ukraine situation, accelerating inflation triggered by soaring raw material and energy prices, and foreign exchange fluctuations resulting from the implementation of global monetary tightening policies. The global situation surrounding Japan's economy therefore remained unpredictable.」

「In overseas economies, uncertainty regarding the outlook continued due to the stagnation of China's economy resulting from the continuation of China's zero-COVID policy, the prolonged Russia-Ukraine conflict, accelerating inflation and the implementation of monetary tightening policies in Europe and the United States.」

「In overseas economies, uncertainty regarding the outlook continued due to geopolitical risks arising from Russia's invasion of Ukraine, accelerating inflation and the implementation of monetary tightening policies in Europe and the United States, delays in recovery from lockdowns in major Chinese cities, and the stagnation of China's economy.」

「In overseas economies, in addition to the effects of geopolitical risks arising from Russia's invasion of Ukraine, uncertainty regarding the outlook continued as lockdowns were implemented in major Chinese cities amid the spread of COVID-19.」

「Although economic activity in overseas economies, particularly in the United States and China, showed signs of recovery, COVID-19 was spreading again, and uncertainty regarding the outlook for economic recovery continued.」

「However, in the chemical-fiber spinning nozzle business operated by the subsidiary Nippon Nozzle Co., Ltd., the subsidiary's performance substantially exceeded that of the previous consolidated fiscal year because sales of nonwoven fabric manufacturing equipment, nonwoven-related nozzles and other products grew significantly amid expanding global demand for masks.」

「Overseas economies were similarly affected by the spread of COVID-19, with no clear prospect of its containment, and uncertainty regarding the outlook for economic recovery continues.」

「During the cumulative first quarter of the current consolidated fiscal period, Japan's economy deteriorated sharply as economic activity was significantly restricted by the state of emergency declared on 7 April 2020 in response to the spread of COVID-19.」

「Although domestic demand remained firm, external demand conditions continued to be challenging due to trade issues between the United States and China, the UK's EU withdrawal issue and other factors.」

「Under these circumstances, in the electronic materials slicing-related business, sales fell substantially below the same period of the previous year due in part to the contraction of the production structure following resolutions to close the Okinawa Plant and Izumi No. 2 Plant, which had produced diamond wire, as well as the continued decline in diamond wire selling prices after the start of the current fiscal year following declines since the previous fiscal year.」

「There are concerns that downside risks to the global economy may materialize due to a prolonged US-China trade conflict, the UK's EU withdrawal issue and other factors.」

「In 2018, the market price of diamond wire declined by approximately 70%, resulting in a significant impact due in part to the effects of measures by the Chinese government to discontinue subsidies for solar power generation.」

「Meanwhile, as concerns over a slowdown in the global economy grew due to the intensification of trade friction between the United States and China, uncertainty regarding the outlook for domestic and overseas economies increased.」

「The recovery of the solar-related market expected from the second quarter onward has been slower than anticipated. In addition, following a further decline of approximately 30% in the market price of diamond wire in September from the level at the end of the first quarter, representing a decline of approximately 70% from the beginning of the year, the sales environment for diamond wire became even more challenging.」

「The sudden tightening measures by the Chinese government caused the solar-related market to cool sharply, leading to a drastic decline in shipments of the Group's flagship product, diamond wire, and a substantial decline in sales from the same period of the previous year.」

「Under these circumstances, in the Group's core electronic materials slicing-related business, sales declined substantially from the same period of the previous year due to a reduction in transaction volume during negotiations with major customers over selling prices, as well as the emergence of excess supply of wafers by Chinese manufacturers of silicon wafers for solar cells, which delayed the commencement of transactions with new major customers to replace the previous major customers.」

「The emergence of excess supply of wafers by Chinese manufacturers of silicon wafers for solar cells has delayed the securing of major customers to replace the previous major customers, resulting in a substantial decline in sales from the same period of the previous year.」

「In addition to sluggish personal consumption and lacklustre growth in emerging economies, including China, concerns over a slowdown in the global economy arising from issues such as the UK's withdrawal from the EU, together with the strengthening yen trend, made the outlook for the domestic economy more uncertain than before.」

「If unforeseen circumstances arise, such as changes in the economic environment, competitor conditions, amendments to legal regulations, changes in the energy policies of individual countries, or a shift to other power generation methods, preventing the originally planned business objectives from being achieved and making it impossible to generate sufficient future earnings commensurate with the investment, the Group's operating performance and financial position may be affected.」