FUJITA ENGINEERING CO.,LTD.

The construction industry is heavily influenced by public and private capital investment. If such investment contracts due to an economic downturn, the Group's business performance could be adversely affected. The Group addresses this by closely monitoring the balance between public and private construction work and continuously developing new customers.

In the procurement of materials such as piping, a sharp rise in raw material prices, shortages, or supply chain disruptions could lead to increased material costs and delivery delays, affecting business performance. The Group addresses this by strengthening information sharing with key business partners, diversifying procurement sources, arranging for key materials in advance, and maintaining appropriate inventory levels.

In the construction industry, the contract amount per transaction is large, and many contracts stipulate payment upon delivery of the completed work. If a business partner becomes financially unstable before payment is received, the Group may need to record allowances, which could affect business performance. The Group addresses this through continuous information gathering and analysis to secure receivables.

If a large-scale natural disaster such as an earthquake or typhoon causes human or physical damage to the Group or its business partners, this could result in delays in materials procurement, operational suspension, significant extension of construction periods, and expenditures for restoring construction sites, thereby affecting business performance. The Group prepares for such disasters through labor safety measures and the development of a business continuity plan (BCP).

The Group holds securities and business-use real estate, among other assets. If doubts arise regarding the going-concern status of a securities issuer, if market value declines significantly, or if the market value or profitability of business-use real estate deteriorates markedly, the Group may need to record impairment losses, which could affect business performance. The Board of Directors and other bodies continuously assess the appropriateness of such investments.

Human or physical accidents or disasters occurring during construction work, unprofitable projects arising from unexpected additional costs, and large-scale repair work resulting from negligence, among other factors, could affect business performance. The Group addresses this by establishing specialized departments to manage safety, scheduling, quality, and the environment.

A quantitative or qualitative shortage of personnel, declining employee engagement, or mismatches between personnel and new technologies or new work processes could affect business performance. The Group addresses this by diversifying career paths through a multi-track personnel system, developing capabilities through training programs, introducing DX tools, and improving the working environment.

The electronic components manufacturing business is strongly affected by cyclical fluctuations in the semiconductor market. During market downturns, shrinking product demand, excess inventory, sharp declines in selling prices, and overproduction could occur, affecting business performance. The Group addresses this by building a system that allows flexible reallocation of management resources related to this business.

Changes in laws and regulations or political, economic, and social conditions in the countries or regions where the Group operates could affect business performance. In addition, exchange rate fluctuations when translating the financial statements of overseas consolidated subsidiaries into yen could also affect business performance. When expanding overseas, the Group addresses this by investigating in advance the risk of conflicts and other such events occurring.

If a large-scale outbreak of a new infectious disease restricts sales and business activities, or if infections occur among employees or business partners, this could result in the suspension or postponement of construction work and delays in materials procurement, affecting business performance. The Group works to minimize the impact through preventive measures such as remote work, communicating response policies to employees, and formulating a BCP.