Last Updated: Aug. 2, 2022
Financial Results for the 1Q of FY2022
About the HPP Company
(Kamiwaki) While roughly 20% of the year-on-year increase in the Electronics field is attributable to improvements in selling prices, the overall impact of foreign currency exchange rates is significant. The same can be said of the Mobility field, where around 20% is due to improvements in selling prices. In the Building and Infrastructure field, improvements in selling prices account for approximately 80% of sales growth.
- *HPP Company：High Performance Plastics Company
About the HPP Company <Electronics Field>
(Kamiwaki) We believe that customers took steps in the 1Q to secure inventories prior to the lockdowns in China. At this point, the balance of market inventories would appear to be substantial. On this basis, we are looking at a 2Q correction to the 1Q rush in demand.
(Okano) We are looking to expand our market share and secure growth in such products as protective films for semiconductor-related processing materials and protective foam sheets for components used in smartphones.
(Kamiwaki) Currently, conditions in the semiconductor-related components market remain generally firm.
(Okano) Negotiations are underway to improve selling prices for polyolefin-related tape and film products to counter the surge in raw material costs.
About the HPP Company <Mobility Field>
(Okano) HUD brightness and color are a product of functional improvements in projectors. Our HUD interlayer films can be covered by conventional technologies. We believe any upswing in models equipped with HUDs would be a positive development for the Company.
(Kamiwaki) While domestic flight aircraft models are showing a certain degree of recovery, production of international flight aircrafts, our principal market, is yet to resume. Under these circumstances, we do not envisage a recovery at this point in time. In contrast, steady progress is being made in cultivating non-aircraft sectors including the medical, drone, and engine fields.
About the HPP Company <Building and Infrastructure Field>
(Kamiwaki) We are pushing forward improvements in the selling prices of all products in the Building and Infrastructure field and not just CPVC. In India, our largest market, trends in demand for CPVC that facilitates the manufacture of high-performance building materials is extremely firm. We are making steady progress in passing on the high cost of raw materials to selling prices.
About the Housing Company
(Kamiwaki) While new housing orders were down year on year in June, we believe this is a temporary phenomenon and reflects orders captured in advance in May. With this in mind, we anticipate orders will once again progress in line with plans from July.
(Kamiwaki) This is indeed due to efforts aimed at leveling out sales, which progressed in excess of plans. We will continue to progress going forward. While sales are posted after receiving an order when delivery to the customer is completed, historically sales in the Housing business are substantial in the 2Q. Bringing this forward while lowering the overall peak will contribute to improved factory productivity and transportation efficiency. We anticipate overall trends in the 1H will essentially be in line with plans.
(Kamiwaki) We will adopt a cautious approach toward price revisions so as not to affect demand.
About the Medical Business
(Kamiwaki) While steps were taken to submit an application for approval to the U.S. authorities under the emergency use authorization system, the review process is showing signs of returning to normal as COVID-19 conditions settle. This is in turn making it more difficult to obtain approval. Another factor raised is the insufficient availability of positive specimens for the Omicron strain. Moving forward, we will prioritize combination kits that facilitate the diagnosis of both COVID-19 and influenza. We will work toward generating contributions to earnings from the 2H.
(Kamiwaki) Trends including the upswing in the procurement of land associated with the Group's housing, ready-built housing, and town and community development activities as well as the surge in raw materials costs are significant factors in the amount of raw material inventory. Reductions in fixed costs are progressing in real terms and not as a result of an increase in inventory.