The third quarter financial results for the fiscal year ending March 2023 (April 2022 to March 2023) are as follows, and unfortunately, we have revised our full-year forecast downward.
We deeply regret causing concern to many of you. We sincerely apologize.

The factors for the downturn include a sharp decline in demand for electronic devices, including smartphones, which are the main application of our products, due to excess inventory for Chinese smartphone manufacturers, and a significant reduction in production capacity at our Chinese manufacturing sites due to the zero-COVID policy, which also affected us. This accounted for about 60% of the downturn factors. Additionally, the impact of the Ukraine conflict in Europe has led to rising prices, which has slowed consumption, and adjustments in automobile production due to semiconductor shortages, accounting for 15% of the downturn factors. We are still in the midst of this situation, and we expect demand to recover as early as March 2023, or as late as summer.
Regarding the surge in material costs, the balance was zero due to price increases in sales, but the increase in non-sales-related factory operations, including prototypes involving material consolidation and changes that began in late 2020, has also contributed to the downturn factors due to the burden of these operational costs.

Looking ahead, we do not expect a significant increase in demand for electronic devices, including smartphones, in the second half of the fiscal year ending March 2024, but we anticipate a return to normal levels, and we expect our performance to stabilize.

On the positive side, we expect an increase in sales by accurately contributing to the growing demand for automotive displays, and additionally, we anticipate sales growth by timely launching products under development with different substrates into other fields.
Furthermore, we expect sales growth in our digital twin business, excluding films, by leveraging our technology, know-how, and experience to respond to the rapid market development driven by DX in the construction and manufacturing industries. We believe this situation will continue for 5 to 7 years.

We apologize for not being able to achieve the first-year goals of the medium-term management plan announced in May 2022. We will disclose appropriate content to you again when we return to normal operations (around October 2023).

The entire KIMOTO Group will work together to recover our performance, and we will continue to strive to develop attractive and high-quality products and services that are recognized worldwide. We kindly ask for your warm support.