Risk of Lower Operating Rates Due to Global Shortages of Semiconductors and Electronic Components

「Our Group procures the raw materials used to manufacture its products from multiple suppliers. Although we have entered into basic transaction agreements with these suppliers and maintain stable business relationships, increases in raw material prices or labor costs due to changes in market conditions could lead to higher product prices or lower profit margins. In addition, shortages of raw materials may affect the production process.」

「Although the effects of shortages of some semiconductors and electronic components remained, we continued working to ensure the recognition of sales from orders already received, but sales were below the level of the same period of the previous year.」

「During the cumulative second quarter of the current consolidated fiscal year, Japan's economy remained uncertain. Social and economic activity was returning to normal following the reclassification of the novel coronavirus disease as a Class 5 infectious disease, but shortages of some semiconductors and electronic components continued, while the yen weakened, prices rose and resource prices increased because of the protracted situation in Ukraine.」

「Although the effects of the global shortage of semiconductors and electronic components remained, we continued working to ensure the recognition of sales from orders already received.」

「In terms of profitability, operating profit and ordinary profit both fell below the previous fiscal year, mainly because factory utilization declined owing to the global shortage of semiconductors and electronic components, development expenses increased, and additional retirement benefit expenses were recorded in the first quarter following the change in the method used to calculate retirement benefit obligations at a consolidated subsidiary from the simplified method to the standard method, as described in the additional information.」

「Profit was below the level of the same period of the previous year, mainly due to lower plant utilization caused by the global shortage of semiconductors and electronic components, higher development costs, and additional retirement benefit expenses recorded in the first quarter following a change in the method used to calculate the retirement benefit obligation of a consolidated subsidiary from the simplified method to the standard method, as described in the additional information.」

「In terms of profitability, operating profit and ordinary profit both fell below the same period of the previous year, mainly because the cost of sales ratio deteriorated as factory utilization declined owing to the global shortage of semiconductors and electronic components, and because additional retirement benefit expenses were recorded following the change in the method used to calculate retirement benefit obligations at a consolidated subsidiary from the simplified method to the standard method, as described in the additional information. As a result, for the first 2 quarters of the fiscal year, orders received were ¥49,583 million, up ¥19,365 million year on year; net sales were ¥26,919 million, up ¥1,815 million; operating loss was ¥2,085 million, a deterioration of ¥1,302 million; ordinary loss was ¥1,756 million, a deterioration of ¥1,229 million; and loss attributable to owners of the parent was ¥1,497 million, a deterioration of ¥6,128 million.」

「Sales of power supplies for semiconductor manufacturing equipment were slightly below the level of the same period of the previous year due to the shortage of semiconductors and electronic components. However, sales of power supplies for flat-panel display manufacturing equipment were slightly higher, leaving overall sales at approximately the same level as the previous year.」

「However, amid the recent global shortage of semiconductors and other components, some raw materials have become expensive and subject to long lead times. As this situation is expected to continue for some time, the Company is taking emergency measures such as placing orders early, while also pursuing permanent measures such as switching to alternative components and materials.」

「Sales of signaling equipment, platform screen doors, and various construction services for public railways, JR and private railway operators, and electronic interlocking systems for Indian Railways exceeded the level of the same period of the previous year. Profit, however, was below the previous year's level due in part to lower plant utilization caused by component shortages.」