Deteriorating business conditions and project postponements due to the spread of COVID-19

「A broad range of factors supporting expectations for a future recovery in economic activity has emerged, including improved outlooks for nonmanufacturing industries following the reclassification of COVID-19 as a Class 5 disease in Japan, and signs of a recovery in automotive production against the backdrop of improved availability of components such as semiconductors. However, there has been no sign of an end to broad-based price increases, and soaring prices for various materials and components directly related to our business activities, together with higher energy costs, continued to put downward pressure on earnings.」

「A broad range of factors supporting expectations for a future recovery in economic activity has emerged, including improved outlooks for nonmanufacturing industries following the reclassification of COVID-19 as a Class 5 disease in Japan, and signs of a recovery in automotive production against the backdrop of improved availability of components such as semiconductors. However, there has been no sign of an end to broad-based price increases, and soaring prices for various materials and components directly related to our business activities, together with higher energy costs, continued to put downward pressure on earnings. In addition, the timing of a recovery in demand for semiconductor manufacturing equipment remains uncertain due to a decline in demand against the backdrop of looser supply and demand for semiconductors.」

「During the first 3 quarters of the current fiscal year, various restrictions affecting economic activity were eased, including the review of Japan's border-control measures for COVID-19. At the same time, the Group faced issues including rising energy costs, soaring prices and deteriorating availability of various materials and components, and significant exchange-rate fluctuations. In this environment, we continued to develop our businesses while taking swift action to address these issues surrounding the Company.」

「While there were signs that various restrictions on economic activity resulting from COVID-19 were gradually shifting toward relaxation, the range of issues requiring monitoring and action has broadened, including the heightened risk of supply chain disruptions stemming from global inflation, rising energy costs and the emergence of geopolitical risks, as well as sharp exchange-rate fluctuations.」

「During the first 3 quarters of the current fiscal year, the Group's operating environment generally progressed as expected, primarily in its domestic businesses, reflecting the recovery trend in economic activity against the backdrop of a decline in COVID-19 cases. However, uncertainty about the outlook has persisted due to changes in the external environment, including global supply chain disruptions typified by shortages of semiconductors and electronic components, soaring material prices, and the emergence of new variants that are rapidly spreading both in Japan and overseas.」

「During the six-month consolidated cumulative period, the operating environment for the group remained affected in certain business areas by customers’ revised investment plans in Japan and overseas as a result of the global spread of COVID-19. In addition, uncertainty about the outlook persisted because of changes in external conditions, including supply chain disruptions typified by shortages of semiconductors for automotive applications and surging material prices.」

「During the first-quarter consolidated cumulative period, the operating environment for the group remained affected in certain business areas by customers’ revised investment plans in Japan and overseas amid the spread of COVID-19. The outlook also remained uncertain, as the pace of increase in infections, including those caused by variants, was again trending upward in many countries, including Japan.」

「The global spread of COVID-19 affected the group’s overseas bases, particularly in China, ASEAN and India, through production stoppages, delays in procuring components and postponed revenue recognition.」

「However, the outlook remained uncertain, including because the number of COVID-19 cases was beginning to rise again globally and automakers were expected to cut production due to shortages of semiconductors for automotive applications.」

「During the six-month consolidated cumulative period, the operating environment for the group showed signs that the impact of customers’ revised investment plans and declining demand in Japan and overseas, resulting from the spread of COVID-19, was becoming apparent across multiple business areas.」

「During the first-quarter consolidated cumulative period, Japan’s economy deteriorated markedly under the impact of the spread of COVID-19. The situation remained uncertain, with the pace of increase in infections again trending upward in many countries, including Japan. Maintenance and services business Although demand increased for BCP measures, energy conservation and the extension of equipment service lives, COVID-19 led mainly to postponed orders, cancelled plans and budget revisions for private-sector projects. Revenue fell 7.8% year on year to ¥4,680 million, while the operating loss deteriorated by ¥80 million to ¥510 million.」