SUMIKEN MITSUI ROAD CO.,LTD.

The road paving business, a core segment, is highly dependent on the public investment market, and if the government's public investment policy changes abruptly, net sales could decline significantly. The Group is working to reduce this dependence by strengthening proposal-based sales to private civil engineering projects, but it is difficult to completely eliminate the impact of policy changes.

In the construction business and manufacturing/sales business, if fluctuations in the prices of asphalt, a key raw material for asphalt mixture, and manufacturing fuel such as heavy oil cannot be passed on to product sales prices or contract amounts, business performance could be affected. Because factors such as ongoing geopolitical risks surrounding Ukraine and the Middle East, and the prolonged trend of yen depreciation, are diverse and difficult to predict, the Group seeks to minimize the impact through early price pass-through.

If acts in violation of laws and regulations such as the Construction Business Act or the Antimonopoly Act occur, administrative sanctions, claims for damages, and loss of social credibility could affect business performance. The Group is strengthening the operation of its business risk management system, developing internal regulations, and providing education and training to thoroughly ensure compliance and enhance corporate ethics.

Due to the nature of the working environment and methods involved, the construction business has a higher accident rate than other industries. If a labor accident or public accident occurs, supervisory dispositions such as business suspension under the Construction Business Act, suspension of qualification to bid by public ordering entities, and claims for damages could arise, affecting business performance. The Group works to prevent accidents through safety patrols and safety training for partner companies.

External threats such as cyberattacks, computer virus infections, and unauthorized access, as well as internal threats such as employee negligence or misuse, could result in leaks of confidential or customer information or prolonged system outages, potentially affecting business performance through loss of credibility, suspension of transactions, and claims for damages. The Group promotes continuous improvement based on its Information Security Standards, enhances education, training, and monitoring systems, and strengthens technical countermeasures against increasingly sophisticated cyberattacks.

Business partners vary widely in transaction amount, company size, and financial condition, and if a business partner falls into credit instability due to sudden changes in the business environment, business performance could be affected. The Group seeks to mitigate this risk by establishing certain criteria for order review and carefully examining the credit standing of business partners.

If a large-scale natural disaster (such as an earthquake, tsunami, or wind/flood damage) or the spread of an infectious disease occurs in areas including the locations of offices and factories, business continuity could be disrupted, affecting business performance. The Group seeks to reduce business continuity risk through the formulation of a Business Continuity Plan (BCP), regular drills of its safety confirmation system, and the establishment of a work-from-home system.