Impact of COVID-19 on Demand and Production Activity and Uncertainty in Accounting Estimates

「With restrictions on activities related to COVID-19 being eased, progress is being made toward normalizing social and economic activity. At the same time, the possibility remains of future outbreaks of new variants and the emergence of new infectious diseases.」

「Although the Japanese economy was expected to recover from the damage caused by COVID-19, personal consumption showed marked weakness under the impact of higher prices caused in part by the yen's depreciation. In the manufacturing industries to which our group belongs, overseas lockdowns, shortages of semiconductors and components, and higher raw material prices and greater difficulty obtaining raw materials temporarily disrupted production in some industries.」

「In overseas economies, notably higher prices, particularly for energy, increased concerns about further inflation and adversely affected personal consumption, while efforts to restore corporate production activity also lost momentum.」

「Although Japan's economy was expected to recover from the damage caused by COVID-19, personal consumption remained sluggish due to high prices. In the manufacturing sector to which the group belongs, some industries experienced production disruptions due to overseas lockdowns, shortages of semiconductors and other parts, greater difficulty obtaining raw materials and logistics delays.」

「The impact of COVID-19 on results during the current consolidated fiscal year was mainly as follows: ・Decline in sales and deterioration in profitability due to lower utilization of overseas sales and production facilities resulting from closure orders from local governments, mainly in ASEAN ・Decline in sales to the equipment market, including automobiles, due to delivery adjustments for the company's products in line with customers' production adjustments」

「In the manufacturing sector to which the company belongs, production trends were strong, particularly for capital goods, but some industries experienced production disruptions due to parts shortages, including semiconductors, and logistics delays.」

「Some areas, particularly automobiles, industrial machinery and electronic equipment, experienced production stagnation due to parts shortages caused by the semiconductor shortage that has continued from the previous fiscal year and lockdowns in ASEAN countries. In overseas economies, personal consumption and corporate production activity began to improve as vaccination progressed in developed countries, including the United States, but concerns about the spread of new variants remained unresolved and rising resource prices also hindered the recovery.」

「The impact of COVID-19 on results during the cumulative first quarter of the current fiscal year was mainly as follows: ・Decline in sales to the plant market, particularly overseas, reflecting labor shortages caused by restrictions on movement within Japan and between countries ・Decline in sales and deterioration in profitability, mainly in ASEAN, due to lower utilization of overseas sales and production facilities resulting from closure orders from local governments」

「The impact of COVID-19 on results during the current consolidated fiscal year was mainly as follows, although these effects were largely reflected by the results through the cumulative second quarter, and their impact after the third-quarter results became less pronounced. Orders also continued to recover, with orders received in the three-month third and fourth quarters exceeding those in the corresponding quarters of the previous year, respectively, and orders outstanding at the end of each quarter also exceeding the corresponding year-earlier quarter-end levels.」

「These effects were mainly reflected by the cumulative second quarter, and their impact during the three-month third quarter was somewhat less pronounced. Orders also began to recover, with orders received during the three-month third quarter totaling ¥11,092 million, up 2.4% year on year, while orders outstanding at the end of the three-month third quarter exceeded the level at the end of the year-earlier period.」

「The impact of COVID-19 on results during the cumulative second quarter of the current fiscal year was mainly as follows: ・Decline in sales to the equipment market, whose main customers are in the automotive and industrial machinery-related industries ・Postponement of certain projects for the advanced industries and plant markets due to the impact of revised capital investment plans ・Decline in the number and scale of plant maintenance projects, particularly overseas, reflecting labor shortages caused by restrictions on movement within and between countries ・Lower utilization of overseas sales and production facilities, mainly in China, due to lower demand and closure orders from local governments」

「The impact of COVID-19 on results during the cumulative first quarter of the current fiscal year was mainly as follows: ・Decline in sales to the equipment market, whose main customers are in the automotive and industrial machinery-related industries ・Postponement of certain projects for the advanced industries market, reflecting moves to review semiconductor capital investment plans ・Lower utilization of overseas sales and production facilities, mainly in China, due to lower demand and closure orders from local governments Accordingly, based on information from external sources and other information, the company has made accounting estimates, including impairment accounting for property, plant and equipment and the recoverability of deferred tax assets, on the assumption that the impact of the spread of COVID-19 would continue for a certain period of the fiscal year ending March 2021.」