Economic and business impact of COVID-19

「The Group has prepared measures and systems, including response manuals, in anticipation of a rapid and global outbreak of an infectious disease. However, as international movement of people increases, the Group’s business activities may be affected by human casualties resulting from the emergence of a new infectious disease or by failures in the functioning of social infrastructure.」

「In China, the economy showed signs of recovery following the end of the zero-COVID policy, but the recovery lacked momentum due to the sluggish real estate market and other factors, as well as a pause in the recovery of personal consumption.」

「In China, the economy showed signs of recovery following the end of the zero-COVID policy, but the recovery lacked momentum due to the impact of the sluggish real estate market and other factors.」

「During the first three months of the current fiscal year, economic conditions in Japan recovered moderately as personal consumption and capital investment showed signs of recovery following the easing of restrictions related to COVID-19. Overseas, the U.S. economy recovered moderately and China also showed signs of recovery, while Europe remained stalled.」

「In the logistics business, recovery in the movement of imported and exported cargo is expected as the impact of COVID-19 has eased from previously. However, cargo volumes may remain sluggish due to the prolonged situation in Ukraine and tensions between the United States and China.」

「Overseas, personal consumption and exports increased in the United States, but the risk of a downside to the economy increased due to monetary tightening to contain inflation. In China, the economy showed signs of slowing, including a decline in exports, due to the renewed spread of COVID-19.」

「Overseas, personal consumption and capital investment supported the U.S. economy, but concerns grew that the economy would slow as interest rates were raised to contain inflation. In China, stagnation intensified as economic activity was restricted in some regions due to the renewed spread of COVID-19.」

「In Japan, conditions remained challenging due to COVID-19. Although personal consumption and corporate earnings showed signs of recovery, growth in capital investment, production activity, exports and imports, which had been on a recovery trend, began to slow. The global economy was also affected by the renewed spread of highly transmissible variants and rising resource prices, among other factors, and concerns that the economic recovery was losing momentum intensified, including as the recovery trend in China slowed.」

「The global economy remained sluggish under the impact of the infection. Although economic activity initially showed signs of recovery as it resumed with the progress of vaccinations and other developments, the recovery in China stalled toward the end of the fiscal year due to the renewed spread of highly transmissible variants and rising resource prices, increasing concerns that the economic recovery was losing momentum.」

「In Japan, conditions remained challenging due to the prolonged impact of COVID-19, although exports increased moderately and capital investment and production activity showed signs of recovery.」

「The prolonged impact of COVID-19 is expected to create downside risk.」

「The Group assumes that the economic impact of COVID-19 will continue throughout the fiscal year both in Japan and overseas. There have been no material changes to accounting estimates, including impairment accounting for property, plant and equipment.」

「Revenue-decreasing factors, including stagnant cargo volumes resulting from the impact of COVID-19, brought operating revenue to ¥92.945 billion, down 2.4% year on year. Operating income was ¥4.44 billion, down 20.0% year on year, due to the decline in revenue caused by the infection and an increase in depreciation and amortization expenses for warehouse facilities and other assets that commenced operations during the previous consolidated fiscal year and the first six months of the current consolidated fiscal year.」

「Operating revenue was ¥47.268 billion, broadly in line with the same period of the previous year, up 0.3% year on year. While the impact of the infection caused revenue declines due to stagnant cargo volumes and other factors, revenue was supported by increased handling of e-commerce-related transportation and other factors. At the beginning of the fiscal year, the Group assumed that the impact of the spread of COVID-19 on economic activity would continue in Japan through the end of the second quarter and overseas throughout the fiscal year. As the timing of the containment of the infection remains uncertain, the Group now assumes that the impact in Japan will also continue throughout the fiscal year.」

「Corporate activity is expected to remain constrained and consumption subdued due to the spread of COVID-19, resulting in continued challenging conditions. In the logistics and shipping businesses, cargo volumes may decline significantly depending on the spread of the infection. In the real estate business, in addition to worsening business sentiment, rent reductions and other effects are expected as tenants suspend operations due to the impact of the infection.」