Earnings downside from weak domestic and overseas demand, yen appreciation and overseas economic slowdown

「Uncertainty about the outlook continues, including developments in the trade policies of major countries and concerns about higher resource prices and supply disruptions associated with heightened tensions in the Middle East.」

「At the same time, uncertainty about the outlook continues, including the heightened risk of an economic slowdown due to the impact of U.S. trade policy, concerns about the outlook for the Chinese economy and instability in the Middle East.」

「At the same time, uncertainty about the outlook continues, including the heightened risk of an economic slowdown due to the impact of U.S. trade policy, concerns about the outlook for the Chinese economy and instability in the Middle East.」

「Meanwhile, uncertainty about the outlook has persisted, owing to downside risks to overseas economies from monetary tightening centered in Europe and the United States and concerns about the outlook for the Chinese economy, developments in US tariff policy, rising prices including raw material and energy costs, and instability in the Middle East.」

「During the interim consolidated accounting period (1 April 2024 to 30 September 2024), the Japanese economy was on a gradual recovery track due to improvements in employment and income conditions and stronger inbound demand, although some areas showed signs of stagnation. Meanwhile, uncertainty about the outlook has persisted, owing to downside risks to overseas economies from monetary tightening centered in Europe and the United States and concerns about the outlook for the Chinese economy, rising prices including raw material and energy costs, and instability in the Middle East.」

「During the current consolidated fiscal year, personal consumption in the Japanese economy showed signs of recovery due to improvements in employment and income conditions, in addition to the transition of COVID-19 to a Category V infectious disease. Consumer-related business sentiment also recovered gradually as inbound demand increased. On the other hand, the outlook remains uncertain, as downside risks in overseas economies, including the effects of rising prices, global monetary tightening and concerns about the outlook for the Chinese economy, could weigh on the domestic economy.」

「Meanwhile, the global appetite for capital investment has declined against a backdrop of inflation and the situation in Ukraine, and exports have tended to remain sluggish.」

「Overseas, although labor shortages and rising labor costs in the food-service and retail industries continued to drive efforts toward mechanization and labor saving, inflation and monetary tightening centered in Europe and the United States, together with geopolitical risks surrounding the situation in Ukraine, reduced operators' appetite for capital investment, resulting in lower demand for products.」

「During the current consolidated fiscal year, the Japanese economy was significantly affected by the prolonged impact of COVID-19, higher energy prices resulting from Russia's invasion of Ukraine, soaring raw material costs, global inflation and yen depreciation. From the second half of the fiscal year, personal consumption entered a recovery trend as a lifestyle compatible with living with COVID-19 became established. In addition, consumer-related business sentiment improved significantly on the back of a sharp recovery in inbound demand.」

「During the cumulative third quarter of the current consolidated fiscal year, business sentiment in manufacturing deteriorated due to higher raw material costs. In non-manufacturing, however, consumer-related sectors such as accommodation and food services improved significantly on the back of a sharp recovery in inbound demand, resulting in increasingly polarized business sentiment. Although personal consumption continued to be affected by COVID-19, a sharp decline was avoided as a lifestyle compatible with living with COVID-19 became established.」

「However, consumer price inflation has recently intensified, particularly for essential goods such as food and energy. Together with yen depreciation, rising resource prices and unstable international conditions including the invasion of Ukraine, this represents a source of numerous downside risks to the economy.」

「However, the current environment is characterized by numerous downside risks to the economy, including the spread of COVID-19 variants, Russia's invasion of Ukraine, China's zero-COVID policy, yen depreciation and rising resource prices.」

「Looking ahead, numerous economic risks remain, including restrictions on the supply of components, particularly semiconductors, developments surrounding Russia's invasion of Ukraine, and resulting increases in resource prices and consumer prices.」

「However, the full-scale recovery of corporate capital investment and consumption continues to depend on the status of COVID-19 infections. Recently, there have been concerns about downside risks to the economy from the spread of new variants and shortages of semiconductors and other components.」

「Business sentiment in manufacturing improved against a backdrop that included increased exports accompanying the recovery in overseas economies. In non-manufacturing, however, consumer-facing services, accommodation and food services, which were heavily affected by COVID-19, remained weak, making the polarization of business sentiment increasingly pronounced.」

「There are also concerns about the spread of COVID-19 variants and shortages of semiconductors and other components, and these developments will require close monitoring.」

「During the cumulative third quarter of the current consolidated fiscal year, the economy showed signs of recovery, but the level of economic activity remained depressed due to the effects of COVID-19. Recently, exports have increased as economies in various countries recover, and revenue and ordinary profit across all industries have turned to growth. Capital investment is also expected to turn to a gradual recovery as corporate earnings improve. Personal consumption, however, is unlikely to avoid a prolonged downturn against a backdrop of the renewed spread of COVID-19.」

「During the cumulative second quarter of the current consolidated fiscal year, external demand continued to show signs of recovery, while domestic demand slowed as the renewed spread of COVID-19 weighed on it. Corporate performance fell sharply year on year in both revenue and earnings across all industries, and capital investment also declined in response to deteriorating performance. With employment and income conditions continuing to worsen, personal consumption is likely to remain depressed for an extended period. There is still no sign that COVID-19 is subsiding, and many countries are experiencing rapidly expanding infections, leaving the outlook for the economy uncertain.」

「During the cumulative first quarter of the current consolidated fiscal year, the Japanese economy experienced a sharp downturn as the global spread of COVID-19 stalled economic activity. Overall, corporate performance and employment conditions have deteriorated, and uncertainty remains regarding the outlook, including concerns about a second wave of infections. Although restrictions on going out and on travel outside one's prefecture were eased after the lifting of the state of emergency, a strong recovery in personal consumption remains unlikely.」

「During the current consolidated fiscal year, the Japanese economy continued to recover gradually through the third quarter, but the effects of COVID-19 have become pronounced recently. The global spread of the virus has restricted the movement of people, stalled economic activity and caused the global economy to lose momentum overall.」

「Corporate earnings were weak due to elevated inventory levels and sluggish exports, and the overall economy showed signs of stagnation. Looking ahead, the economy is expected to sustain a gradual recovery, supported by capital investment in rationalization and labor-saving measures and a recovery in personal consumption following the consumption tax increase. In external demand, developments in Japan-South Korea relations and US-China trade frictions will continue to require close monitoring.」

「During the cumulative second quarter of the current consolidated fiscal year, the Japanese economy saw continued improvements in employment and income conditions, and personal consumption remained firm. However, industrial production lacked strength against a backdrop of sluggish external demand and elevated inventory levels, and the overall economy showed signs of stagnation. Looking ahead, although business sentiment has deteriorated, capital investment is expected to continue increasing, supported by worsening labor shortages and high corporate earnings. In external demand, exports are expected to turn to growth on the back of measures by the Chinese government to support the economy, although a strong recovery in overall exports is unlikely while the global economy generally lacks momentum.」

「Looking ahead, although business sentiment has deteriorated, capital investment sentiment remains firm against a backdrop of worsening labor shortages and responses to work-style reforms. In external demand, exports are expected to recover on the back of measures by the Chinese government to support the economy, although developments in US-China trade frictions will continue to require close monitoring.」

「On the external-demand side, concern remains over downside pressure from uncertain overseas conditions, including U.S.-China trade friction and political instability in Europe.」

「On the external-demand side, growth has slowed recently, including a slump in exports to China, and concern remains that downside pressure will intensify further amid uncertainty over the outlook for the U.S.-China trade war.」

「During the cumulative second quarter of the fiscal year under review, Japan's economy maintained its recovery trend, with signs of a recovery in industrial production and the household sector remaining firm. On the domestic-demand side, corporate earnings remained firm, while capital investment followed an upward trend, particularly in labor-saving investment prompted by labor shortages. Personal consumption also followed a recovery trend due to improvements in employment and income conditions. On the external-demand side, exports are expected to continue increasing, but concern remains over a shift by the Trump administration in the United States toward protectionism and the resulting intensification of trade friction.」

「On the external-demand side, exports are expected to continue increasing, but concern remains over a shift by the Trump administration in the United States toward protectionism and the resulting intensification of trade friction.」

「During the fiscal year under review, Japan's economy followed a moderate recovery trend as corporate production activity and exports regained momentum. Personal consumption also showed signs of recovery against the backdrop of improvements in employment and income conditions.」

「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.」

「On the external-demand side, inbound demand and exports remain firm, but downside risks to exports persist due to uncertainty over the U.S. administration's policy management and the situation in North Korea.」

「During the cumulative first quarter of the fiscal year under review, Japan's economy recovered moderately, with corporate activity continuing to regain momentum and signs of recovery also emerging in the household sector. On the domestic-demand side, corporate earnings and capital investment remained firm, but income recovery was slow and personal consumption recovered only moderately. On the external-demand side, inbound demand and exports are expected to continue increasing, although uncertainty over the Trump administration's policy management in the United States remains a concern.」

「During the fiscal year under review, Japan's economy recovered moderately as corporate production activity and exports regained momentum. Meanwhile, consumer sentiment remained depressed, and personal consumption continued to lack strength.」

「Consumer sentiment remains depressed, and personal consumption continues to lack strength. Recently, business sentiment has shown signs of improvement following yen depreciation and a rise in share prices after the U.S. presidential election. However, uncertainty in the global economy is increasing amid numerous politically driven uncertainties related to U.S. policy management and politics in other countries.」

「The recovery in personal consumption remains weak on the domestic-demand side. On the external-demand side, given the slowdown in the global economy and the impact of yen appreciation, conditions are likely to remain vulnerable to downside through deteriorating sentiment and corporate earnings for the time being.」

「The recovery in personal consumption remains weak on the domestic-demand side. On the external-demand side, the slowdown in overseas economies, particularly in emerging markets, the trend toward yen appreciation and the UK's withdrawal from the EU are likely to make conditions vulnerable to downside through deteriorating sentiment and corporate earnings for the time being.」