What are the numbers in the new operating income breakdown for the full year?

We expect sales volume and product mix to be positive by 9.0-10.0 billion yen, fixed costs to be negative by 6.0-7.0 billion yen, FX effects to be positive by 4.5-5.0 billion yen, and component and logistics costs to be negative by slightly less than 5.0 billion yen.

Could you tell me the factors for the increase in fixed costs and the breakdown by segment in Q3? Also, the outlook for Q4?

It increases in each segment along with the growth of sales in Q3. We don’t expect a significant increase in Q4 because selling activity expenses last year were largely due to the high level of sales.

I understand that the value of the upward revision is only coming from the amount that Q3 exceeded the previous plan. Is it correct?

Although we expect the current stable business environment to continue in Q4, our new plan is conservative in light of macro risk factors.

Are there any changes in order trends in each segment?

Each segment is largely unchanged. The backlog of orders decreased slightly at the end of December compared with the end of September but remained high compared with normal.

I understand that the next FY will be the first year of the next Mid-term Business Plan. Will the FY22 trend continue in FY23?

Positioning Company and Smart Infrastructure Businesses are seeing strong non-residential construction investment in the U.S., and demand for solution business at Eye Care Business is also strong. We see this trend continuing in FY23. In addition, we will continue upfront investments from a medium- to long-term perspective, but we will do so in a balanced manner. From this perspective, we do not expect earnings to decline in the FY23 plan. However, we expect that the uncertainty regarding the macro environment will persist.

Inventory is increasing. Is the current amount adequate?

The increase in inventory was due to three combined factors: an increase in work-in-process inventory, including finished products with shipments on hold due to production delays caused by a shortage of components, the strategic stockpiling of some components (front-loaded purchases), and higher prices, including a weaker yen base purchase. Although the current level is more than adequate, they are not dead stock, and we expect the excess will be eliminated in the next fiscal year and beyond.

What is the ratio of sales to residential construction and non-residential construction, and what is the percentage change for each?

We can provide only a rough image of the figures as we do not track whether sales are residential or non-residential. The residential to non-residential ratio would generally be 3 to 7. While the sales for residential construction fell approximately 20% in Q3 YoY, sales for non-residential construction grew. As a whole, Positioning Company sales increased.

What is your Q4 outlook for non-residential construction?

Non-residential demand continued to be strong in Q3 as in Q2. Q3 is usually a time when demand slows due to seasonality, but one of the positive factors is that the backlog of orders was reduced slightly as a result of the partial easing of the impact of component shortages.

What is the investment sentiment of clients at the exhibition, and what is the progress of the U.S. Infrastructure Investment and Employment Act?

The investment sentiment of many clients seems bullish, particularly in the infrastructure construction and commercial building sectors. In terms of infrastructure, such as roads and bridges, we’re hearing that some projects have started to proceed.

Please let us know the reasons for the downward revision.

The amount of production fell more than expected due to component shortages in Q3. We expect some recovery in Q4, but not a complete recovery.

What is the business and competitive environment in the U.S.?

The major optical chain stores continue to perform well, partly because they need to be more efficient to differentiate themselves from competitors when the economic environment is weak. We don’t have all of the numbers from our competitors, but I don’t think we’re losing.

Why is the operating margin high in Q3 alone? Did the NW500 contribute?

The FX effects are significant. The NW 500 made a limited contribution to sales in Q3, with sales having started in December in the U.S., its main market, but sales have not yet started in Europe where the approval of the regulation process is ongoing.