Business Activity Constraints and Deterioration in the Earnings Environment Caused by COVID-19

「During the first three months of the fiscal year, the Japanese economy showed signs of recovery, centered on domestic demand, supported by the normalization of economic activity and the recovery in inbound demand following the reclassification of COVID-19 as a Class 5 infectious disease.」

「The Group is working to mitigate physical risks by dispersing its locations. It is also addressing these risks by promoting telework and implementing staggered working hours in line with conditions in each region, and is working to mitigate the impact of the spread of infectious diseases on net sales and other factors.」

「During the first six months of the fiscal year, uncertainty remained due in part to the prolonged Russian invasion of Ukraine, but constraints on parts supplies eased following the lifting of lockdowns in China. A gradual recovery led by domestic demand was seen, supported by production increases to address accumulated order backlogs and higher exports.」

「During the first three months of the fiscal year, the Japanese economy showed signs of a gradual recovery as economic activity normalized following the COVID-19 pandemic, despite continued uncertainty caused by soaring resource prices due in part to the prolonged Russian invasion of Ukraine and supply-chain disruptions resulting from lockdowns in Chinese cities.」

「If a new infectious disease with a serious impact were to spread in the future, business activities could be restricted. This could make it impossible for suppliers of the production goods sold by the Group to continue operating, or a large-scale outbreak at one of the Group’s logistics centers could disrupt product supplies and significantly affect net sales and other factors.」

「During the first nine months of the fiscal year, there were signs of recovery, supported by the normalization of economic activity as the number of COVID-19 cases in Japan declined and by the recovery in automobile production. However, uncertainty about the outlook remains, due to such factors as a downturn in corporate earnings caused by soaring resource prices and the emergence of the sixth wave of COVID-19 infections.」

「There have been no material changes to the information concerning the impact of COVID-19 described in the “Additional Information” section of the securities report for the previous fiscal year.」

「During the first three months of the fiscal year, the Japanese economy remained under pressure from the spread of COVID-19 variants, delays in vaccinations and repeated activity restrictions, all of which weighed on the recovery. However, exports associated with the recovery of overseas economies remained firm, and the economy is expected to trend upward, albeit gradually.」

「The Group is addressing this risk by promoting telework and implementing staggered working hours in line with conditions in each region. The risk has already materialized at this point, and although the extent of its impact is expected to vary depending on the spread of the infection, the Group will continue implementing countermeasures and work to mitigate the impact of the spread of infections on net sales and other factors.」

「During the first nine months of the fiscal year, the Japanese economy was gradually showing signs of recovery from the sharp downturn in the first half of the fiscal year. However, economic activity slowed due to the resurgence of COVID-19 infections from the year-end, while rising unemployment and worsening employment and income conditions have heightened uncertainty about the outlook.」

「During the first six months of the fiscal year, the Japanese economy saw a sharp decline in exports against a backdrop of reduced inbound demand due to the spread of COVID-19 and a downturn in the global economy, while domestic consumption also fell significantly. Since July, there have been gradual signs of recovery, helped by the easing of restrictions on going out. However, personal consumption appears likely to remain sluggish for an extended period due to worsening employment and income conditions and the need to continue infection-control measures, including avoiding the “3 Cs.”」

「During the first quarter of the current consolidated fiscal year, the Japanese economy was significantly affected by restrictions on individual and corporate activities, including the declaration of a state of emergency in April following the increase in COVID-19 cases from the beginning of the year. As a result, domestic household consumption fell sharply and corporate earnings deteriorated significantly.」