In light of the Q1 results, are there any changes in the operating income YoY breakdown for the full year?

There are no major changes. There is the possibility that the exchange rate will be slightly more positive and fixed costs will be slightly higher than the initial forecast.

I think gross margins are stable, but I get the impression that SG&A expenses are increasing. Do you intend to strengthen expense controls from Q2?

We have been expanding our workforce as planned in line with our business expansion, but in some regions, we have begun to freeze hiring and reduce SG&A expenses, which will continue in Q2 and beyond.

What’s driving the inventory increase? Will it affect Q2 production plans?

The decrease in sales due to inventory adjustment in the market was unexpected and is a factor in the increase in our inventory as well. As our policy is to keep the level of production as even as possible as a manufacturer, it is possible that we may make some production adjustments in Q2 while monitoring inventory levels and sales.

Are there unrealized losses in Q1?

In addition to the increase in inventories, the rapid depreciation of the yen from the end of March to the end of June has resulted in some unrealized losses.

Please tell us the details of the impairment losses in the development project that caused the extraordinary loss.

In view of the situation in which there is no end in sight to the Russia-Ukraine problem, we have decided to cancel some of the development we were doing at the development center in Moscow and have shifted the development location. As a result, a portion of the capitalized development costs were amortized and an impairment loss was incurred.

To what extent did Q1 earnings fall below expectations?

Sales were around 3-4 billion yen below from expectations and operating income was around 2 billion yen below from expectations.

When did the impact of the inventory adjustment become apparent and will it continue beyond Q2?

I started seeing the effects around May. We believe that the level of inventory in the market has started to decrease to some extent, and we estimate that the impact of inventory adjustment will be small in or after Q2.

Is it correct to understand that it was assumed that the housing construction-related sector would be weak from the beginning of the period, but the final demand has not declined in other sectors?

The residential construction market was largely in line with expectations, and sales outside of residential construction were weak due to inventory adjustments. The final demand for infrastructure construction is not weak, as the number of projects is increasing.

Is it safe to assume that Eye Care was better than planned?

It was mostly as planned.

With the change in the major shareholders, how do you view the importance of Eye Care Business?

The performance of the business was temporarily weak due to upfront investment and the impact of the pandemic, but profitability has been improving. There are various growth themes, and this business’s position as an important growth business for our company has not changed.