To Our ShareholdersOverview of the Operating Results for FY 2021 3rd Quarter and Outlook for Full-Year
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During the nine months ended September 30, 2021 (January 1–September 30, 2021), the global economy continued its gradual recovery on large fiscal outlays by various countries and progress in the rollout of COVID-19 vaccinations, but during the second half of the period economic activity stagnated from the effects of higher resource prices and logistics costs, shortfall in supplies of semiconductors, and a resurgence of new coronavirus infections in Southeast Asia. The U.S. economy was solid, reflecting an improvement in the new coronavirus situation as vaccinations progressed and from large-scale economic measures. In Europe, economies continued to recover as lockdowns in major urban areas and other measures to prevent the spread of new coronavirus infections were eased, leading to a return to normal economic activity. The pace of recovery in the Japanese economy was sluggish, as a resurgence of new coronavirus infections brought economic activity to a standstill. Emerging market economies saw a gradual recovery overall, with economic activity in Southeast Asia stagnating on a resurgence of new coronavirus infections and a slower pace of growth in the Chinese economy.
With regard to markets related to the Mabuchi Group’s products, the automotive products market showed large overall growth for the nine months ended September 30, 2021, with recoveries continuing in all markets despite the effect of production adjustments during the third quarter as a result of a global shortfall in supplies of semiconductors. The consumer and industrial products market grew overall on continued market demand in all regions.
Against this backdrop, Mabuchi’s motor sales rose 20.9% year on year in terms of volume, with a 24.7% year-on-year increase in value. These figures were 4.2% below for volume and 3.9% short in terms of value compared with our sales plan for the nine months ended September 30, 2021 as revised in August. As a result, consolidated net sales for the period were 101,335 million yen (a 24.7% increase year on year), and motor sales, which account for the majority of net sales, were 101,306 million yen (a 24.7% increase year on year).
Although operating income was negatively affected by an increase in material costs on a rise in prices for commodities including copper and steel materials, increased sales volume combined with improvements in sales prices and the product mix resulted in operating income of 11,118 million yen (a 71.9% increase year on year). With this growth in operating income as well as an improvement in foreign exchange gains or losses, ordinary income was 15,533 million yen (a 166.0% increase year on year). Profit before income taxes was 15,240 million yen (a 106.7% increase year on year), and profit attributable to owners of parent was 10,965 million yen (a 163.6% increase year on year).
Although the recovery in the global economy is expected to continue on large-scale fiscal stimulus measures by countries around the world and progress in the rollout of COVID-19 vaccinations, with downward pressure from higher resource prices and logistics costs, shortages in supplies of semiconductors and other components, and the slowing of the Chinese economy, the outlook going forward remains uncertain. The U.S. economy is expected to continue its solid recovery as progress in vaccinations leads to an improved situation with regard to infections, and a pickup in the environment for hiring stimulates retail consumption. A solid recovery is also forecast for Europe as lockdowns in major urban areas in various countries and other new coronavirus-prevention measures are eased, and economies move back to normal. In Japan, a gradual recovery is forecast as retail consumption improves against a backdrop of limitations on activity being eased as vaccinations progress. In emerging market countries, although the situation with regard to infections in Southeast Asia is improving and economic activity is seen restarting, the introduction of real estate regulations and electric power supply limitations are seen slowing the pace of China’s economic growth, and the overall pace of growth is expected to be gradual.
With regard to markets related to the Mabuchi Group’s products, we are forecasting solid results for the automotive products market as global automotive demand recovers, although we are concerned about the possibility of lower-than-projected production volumes because of supply shortages for semiconductors and other components. In the consumer and industrial products market, we expect demand to grow in all markets, and are forecasting an overall recovery.
Against this backdrop, our forecasts for consolidated results and dividends are unchanged. Going forward, we will review our forecasts for operating results and returns to shareholders (including dividend forecasts and purchases of treasury stock) in the event of drastic changes in our operating environment, and promptly disclose any changes to these forecasts.