TODA CORPORATION

There is a risk that construction profitability may deteriorate due to divergence between estimates at the time of order receipt and actual construction costs. Amid continued increases in material prices and labor costs, appropriate cost management and pass-through to order prices remain challenges. As countermeasures, the company is tightening order screening and strengthening precise construction cost management systems.

There is a risk that rising prices of construction materials such as steel and concrete, along with rising labor costs, will push up construction costs. This is recognized as an event that is already occurring, with its impact gradually increasing. The company is addressing this through supply chain diversification, procurement cost reduction measures, and appropriate pass-through to order prices.

There is a risk that construction demand may decline due to fluctuations in domestic and overseas economic conditions and private-sector capital investment. Private construction work in particular is susceptible to economic cycles, and significant fluctuations in order volume directly affect business performance. The company aims to diversify demand fluctuation risk through expansion of public works and overseas business.

In overseas construction business, country risks exist such as political instability, changes in legal systems, foreign exchange fluctuations, and deteriorating relationships with local partners. In emerging market countries in particular, there is a high risk of unexpected regulatory changes and contract non-performance. The company addresses this through enhanced local information gathering, risk diversification, and careful review of contract terms.

There is a risk that additional costs may arise or business activities may be constrained due to amendments to the Construction Business Act, the Industrial Safety and Health Act, environmental regulations, and other laws, or due to tightening of regulations. In particular, responding to overtime work regulations (the so-called 2024 problem) has become an issue for the construction industry as a whole. The company is promoting the development of a compliance system and rapid response to regulatory amendments.

There is a risk that important information such as customer information, technical information, and personal information may be leaked due to cyberattacks or information leaks. In the construction industry as well, the handling of digital data is increasing with the promotion of DX, and the impact of security incidents is expanding. The company is advancing the strengthening of security measures, thorough employee training, and the establishment of incident response systems.

There is a risk that a delayed response to construction technology innovations such as BIM/CIM, AI, and robotics could result in a decline in competitiveness or a missed opportunity to improve productivity. The rapid advancement of digital technology is requiring fundamental reviews of conventional construction methods and business processes. The company is continuously implementing the development of a DX promotion system and technology investment.

There is a risk that securing necessary human resources will become difficult due to the aging of skilled workers and engineers across the construction industry as a whole and the decline in the number of young new entrants. This is recognized as an event that is already occurring, with the potential to affect the maintenance of construction systems and quality assurance. The company is addressing this through enhanced recruitment, improved treatment, and enrichment of technology transfer programs.

There is a risk that construction sites under construction and owned real estate may suffer damage due to the intensification of natural disasters associated with climate change. In addition, costs associated with responding to CO2 emission reductions may increase due to tightening decarbonization regulations. The company is promoting the development of BCP, the development of environmentally responsive technologies, and initiatives toward carbon neutrality.

There is a risk that improper accounting practices, legal violations, quality problems, or other issues at domestic and overseas group companies could affect the credibility and finances of the group as a whole. The complexity of management is increasing as the business scale of group companies expands. The company addresses this through strengthening group governance systems, enhancing internal audits, and establishing information-sharing mechanisms.