Risks Relating to Overseas Expansion and Investment Recovery

「In our overseas business, particularly in Thailand, our core market, the manufacturing production index (MPI) declined 2.9% year on year in the October-December 2023 quarter, 3.6% in the January-March 2024 quarter, 0.2% in the April-June quarter and 1.1% in the July-September quarter, indicating economic stagnation. Vehicle production, a major industry, declined 18.4% year on year in the January-March 2024 quarter, 16.3% in the April-June quarter and 21.0% in the July-September quarter.」

「In Thailand, our core market, the manufacturing production index (MPI) declined 4.9% year on year in the April-June 2023 quarter, 5.2% in the July-September quarter, 2.9% in the October-December quarter and 3.9% in the January-March 2024 quarter, indicating economic stagnation. Vehicle production, a major industry, declined 2.2% year on year in 2023 and 18.5% year on year in the January-March 2024 period.」

「In Thailand, our core market, the manufacturing production index (MPI) declined 3.7% year on year in the January-March 2023 quarter, 5.5% in the April-June quarter, 6.3% in the July-September quarter and 5.1% in the October-December quarter, indicating stagnation. Against this backdrop, the number of temporary staff employed by the Hirayama Group in Thailand stood at 2,806 as of December 2023, down 11.3% year on year.」

「In our overseas business, particularly in Thailand, our core market, the manufacturing production index (MPI) declined 6.0% year on year in the October-December 2022 quarter, 3.7% in the January-March 2023 quarter, 5.5% in the April-June quarter and 6.3% in the July-September quarter, indicating continued stagnation. Against this backdrop, the number of temporary staff employed by the Hirayama Group in Thailand stood at 2,737 as of September 2023, down 10.3% year on year, but revenue increased because additional personnel were secured for high-rate customers.」

「In our overseas business, particularly in Thailand, our core market, the manufacturing production index (MPI) increased 7.7% year on year in the July-September 2022 quarter, before declining 6.0% in the October-December quarter, 3.7% in the January-March 2023 quarter and 5.5% in the April-June quarter, indicating stagnation.」

「In our overseas business, particularly in Thailand, our core market, the manufacturing production index fluctuated, declining 1.1% year on year in the April-June 2022 quarter, increasing 7.7% in the July-September quarter and declining 6.0% in the October-December quarter. Meanwhile, vehicle production, a major industry, showed a recovery trend, increasing 11.7% year on year in 2022.」

「In our overseas business, particularly in Thailand, our core market, the manufacturing production index increased 1.6% year on year in the January-March 2022 quarter, declined 0.8% in the April-June quarter and increased 8.1% in the July-September quarter, indicating a recovery trend.」

「In our overseas business, particularly in Thailand, our core market, the manufacturing production index increased 4.7% year on year in the October-December 2021 quarter and 1.6% in the January-March 2022 quarter, before declining 0.8% in the April-June quarter. Production has stagnated because of the COVID-19 pandemic, lockdowns in China and semiconductor shortages.」

「In the first Tankan survey after Russia's invasion of Ukraine, corporate sentiment is rapidly cooling because of heightened geopolitical risks and soaring resource prices.」

「In our overseas business, particularly in Thailand, our core market, the manufacturing production index increased 0.8% year on year in the January-March 2021 quarter and 20.6% in the April-June quarter, before declining 0.2% in the July-September quarter. Although the index had been recovering from negative growth, the recovery stalled because of the Delta variant.」

「In our overseas business, particularly in Thailand, our core market, the manufacturing production index continued to recover from negative growth, declining 8.5% year on year in the July-September 2020 quarter and 1.6% in the October-December quarter, before increasing 0.8% in the January-March 2021 quarter and 20.6% in the April-June quarter. Against this backdrop, the number of temporary staff employed by the Hirayama Group in Thailand increased 39.4% year on year as of June 2021.」

「In Thailand, our core market, the manufacturing production index reached a low of 20.4% below the prior-year level in the April-June 2020 quarter before recovering to 1.6% below the prior-year level in the October-December quarter.」

「Overseas, in Thailand, our core market, the manufacturing production index reached a low of 23.8% below the prior-year level in May before recovering to 0.5% below the prior-year level in October.」

「In our overseas business, particularly in Thailand, our core market, the manufacturing production index showed low growth, declining 4.2% year on year in the July-September 2019 quarter, 6.8% in the October-December quarter, 6.4% in the January-March 2020 quarter and 20.0% in the April-June quarter. In addition to the stronger baht and sluggish exports, economic activity was depressed by the effects of COVID-19.」

「Because of the spread of COVID-19, global merchandise trade in Reiwa 2 is forecast to fall by as much as 32% year on year, while Asian exports are forecast to decline by 14% to 36%.」

「Overseas, as announced by the World Trade Organization (WTO) on 8 April, the volume of global merchandise trade in 2020 is forecast to fall by as much as 32% year on year because of the spread of COVID-19, while Asian exports are forecast to decline by 14% to 36%. The impact is expected to exceed that of 2009, after the global financial crisis, when trade fell 13%, with disruption to global supply chains and a substantial decline in demand expected to weigh on conditions.」

「In our overseas business, particularly in Thailand, our core market, exports, which had driven manufacturing, fell below the prior-year level from the April-June 2019 quarter through the July-September quarter, and production adjustments became pronounced across manufacturing. The baht also generally strengthened, appreciating by around 6% against the US dollar since the start of the year, directly affecting export industries.」

「In Thailand, our core overseas market, exports, which had driven manufacturing, fell below the prior-year level in the April-June 2019 quarter, and the trend toward production cuts became pronounced across manufacturing. The sector was affected by slowing demand for electronic and electrical components destined for China because of US-China trade friction, as well as slower demand for automotive parts and finished vehicles in Southeast Asia, the Middle East, North America and Central America.」

「FUNtoFUN株式会社 had recognized goodwill based on excess earning power at the time of the share acquisition. After reviewing the business plan, however, it determined that achieving the originally anticipated earnings would be difficult and recognized an impairment loss.」

「In the consolidated third quarter, the DI for large manufacturers recorded its largest deterioration in 6 years and 3 months. The effects of the US-China trade war have emerged, increasing uncertainty about the outlook.」

「In the consolidated second quarter, the diffusion index (DI) for large manufacturers stopped declining for the first time in four quarters, supported by reconstruction demand following natural disasters and lower crude oil prices. However, the effects of the US-China trade war have begun to emerge, increasing uncertainty about the outlook.」

「In our overseas business, particularly in Thailand, our core market, private consumption improved and vehicle sales increased in July and August, indicating a gradual recovery. In September, however, the effects of the trade war emerged, with exports to China, the largest destination, falling 14% and total exports declining 5% year on year. The impact spread to production, and vehicle production fell for the first time in 15 months.」

「To promote growth and development, our group will consider M&A, focusing mainly on companies in the same industry, manufacturing and consulting. These actions may create substantial funding requirements, and the investments may not progress as expected and may take time to contribute to our group's results.」

「As the minimum wage was expected to rise by more than 7% from April 2018, customer companies began considering automation, workforce reductions and a review of temporary staffing. Accordingly, we continued negotiating price increases while proposing a shift to insourcing, and worked to improve margins by reducing selling, general and administrative expenses.」

「Although heightened overseas political and geopolitical risks increased uncertainty about the outlook, the domestic economy continued on a gradual recovery trend, supported by improvements in corporate earnings and employment conditions.」

「In Thailand, our core overseas market, foreign direct investment has fallen significantly and the economy remains weak. Political instability has compounded this, and the entire manufacturing sector, particularly the automotive industry, a major industry, has stagnated.」

「In Thailand, our core overseas market, the economy is weak as foreign direct investment has fallen significantly. Political instability has compounded this, and the entire manufacturing sector, particularly the automotive industry, a major industry, has stagnated.」

「As we expand overseas, we may face various obstacles arising from local business practices, including foreign-exchange risk, collection of receivables and relationship-building with business partners. Political and legal risks also exist, including political instability caused by terrorism and other acts, and deteriorating labor-management relations arising from differences in religious outlooks.」