Presentation Transcripts

Looking back, at the beginning of the year, when we forecasted earnings at the end of April, we expected the impact of the lockdown in Shanghai to last until around mid-May, but it actually lasted until the end of May. However, thanks in part to the significant assist provided by the exchange rate, we were able to mostly achieve our plan for the first half.

In regard to ball bearings, sales remained strong to data centers. Even though the increase in the automobile production volume was below expectation, sales to the automobile industry remained strong, mainly due to a steady increase in the quantity used per vehicle, as I have been pointing out. In fact, the external shipment volume to the automobile industry hit a record high in September. However, the most recent situation since October has been that adjustments are being made by our customers, including in the data center and automobile industries, so although it continues to grow, I would like to note that it may not grow as much this year as the initial forecast.

Nevertheless, as is always the case, we have a portfolio where when one business decelerates, another makes up for it. The depreciation of the yen was another factor, but the aircraft components business played that role for the first time in a while. In September, we recorded profit of 1.0 billion yen. Simply annualizing this amount gives 12.0 billion yen, so it is safe to say that in terms of profit, we have fully returned to pre-COVID levels.

I will talk about each of the other businesses later, but here I would like to touch on the impact of the exchange rate. In the second quarter, where we should have had operating income of 29.4 billion yen, we ended up recording operating income of 26.4 billion yen due to currency hedging. I do not consider this a loss, however. Being responsible for business performance, I decided that we should hedge our currency exposure based on the past bitter experience of failing to achieve our plans so many times as a result of sharp fluctuations in exchange rates. Some might say that we lost 3.0 billion yen, but although operating income decreased by that amount, I do not see it as a loss. On the other hand, because we have adopted IFRS, we are able to record the gain on the sale of the Tokyo Headquarters building under operating income. There may be various ups and downs along the way, but ultimately, I hope to achieve the targets.