Investment and R&D Risks from Fluctuations in Customer Production Plans

「In addition, some customers in the Mobility Business have changed models from EVs to HEVs and other vehicles, or discontinued EV development, which may affect the Group's business performance and financial position.」

「In particular, the business environment remains highly uncertain, as sales strategies at automakers in Japan, North America, and Europe are being revised in response to changes in market conditions, in addition to the impact of trade policies and geopolitical risks affecting the global economy.」

「Based on customers' production plans, the Group arranges components with suppliers after considering market trends, procurement lead times and stable supply. However, fluctuations in customers' production plans resulting from market conditions and the various geopolitical and economic security factors described above may lead to production adjustments and excess inventories, potentially affecting the Group's business performance and financial position.」

「The business environment surrounding the Group remains difficult, despite the boost to sales and various profits from the weaker yen and the recovery trend in global automobile production, due to rising wages, persistently high component and energy prices, and intensifying competition as smartphones become commoditized.」

「The difficult situation continues, including declining demand due to inventory adjustments for consumer and automotive electronic components.」

「These uncertain conditions are increasingly likely to affect the Group's business performance and financial position, including its sales and production outlooks, both in Japan and overseas, and its investments. As a response, the sales, production and procurement divisions are working closely together to share information on customer and market trends promptly and optimize production capacity.」

「China's plant operating rates declined as infections spread following the easing of the zero-COVID policy in December 2022. However, sales and operating income both exceeded the year-earlier period, supported by the recovery in new-vehicle production by automakers and the yen's depreciation against foreign currencies.」

「During the first quarter of the consolidated fiscal year, lockdowns accompanying the spread of COVID-19 in China caused component shortages, including semiconductors, which disrupted supply chains and led to a significant decline in new-vehicle production by major automakers, the Group's primary customers.」

「Production of automobiles and electronic equipment did not reach a full recovery amid supply chain disruptions and semiconductor shortages associated with lockdowns in China, and shipments of electronic components slowed.」

「Even after the start of fiscal 2022, disruptions across the supply chain caused by uncertain political and economic conditions have intensified, including the impact of infection-control measures in various countries in response to the spread of COVID-19, energy issues arising from heightened geopolitical risks such as the invasion of Ukraine, and higher logistics costs and material prices, making the outlook increasingly difficult to assess.」

「In addition, the impact of the semiconductor shortage from the previous fiscal year did not subside, while supplies of components other than semiconductors also became unstable. Supply chain disruptions continued to worsen, and automobile manufacturers in particular continued to revise their production plans.」

「In addition, supply chain disruptions have become more severe as supplies of components other than semiconductors have also become unstable, prompting continued revisions to production plans, particularly among automakers.」

「In the automotive market, the impact of semiconductor shortages resulting from the rapid economic recovery became more severe from the second half of the previous year, making it difficult for automobile production to proceed as planned.」

「In the electronic components industry, a major customer of the Logistics Business, production of products for automobiles and smartphones declined from the first to the second quarter due to the impact of the COVID-19 pandemic. From the second quarter onward, demand for cargo handling volumes increased as market conditions recovered.」

「In the electronic components industry, a major customer of the Logistics Business, production of products for automobiles and smartphones declined due to the impact of the COVID-19 pandemic.」

「In the electronic components industry, a major customer of the Logistics Business, production for smartphones and automobiles declined as customers suspended plant operations due to the spread of COVID-19, resulting in weak shipments of electronic components.」

「The spread of COVID-19 has had a significant impact on the Group's businesses, including through customer plant shutdowns and lower operating rates at the Group's overseas plants.」

「Most of the Group's customers are manufacturers, and the Group's businesses are directly affected by customers' production plans. Such uncertainty may affect the formulation of the Group's medium- to long-term research and development and capital investment plans.」