YAMATO CORPORATION

Construction is an order-based industry, and performance may be affected by a decrease in capital investment by private companies or a reduction in public investment by the government and local governments. As countermeasures, the Group works to secure stable orders by sharing information and grasping needs through business execution meetings and other forums, and by strategically allocating management resources to the renewal and renovation field.

If the Group is slow to respond to demand changes accompanying climate change, its competitiveness may decline and its performance may be affected. The Group works to reduce this risk by strengthening its technology and service capabilities to match customer needs, such as energy conservation and food loss reduction.

In the Construction business, contract amounts and construction expenditures are often high, and if a business partner falls into credit difficulty before payment for construction work is received, a large amount of uncollectible receivables may arise, potentially having a material impact on performance. The Group addresses this through thorough credit management based on concrete grounds and objective evaluation under an organizational project risk management framework.

If a rise in the price of procured equipment and materials cannot be passed on to contract amounts, performance may be affected through a decline in profit margins. The Group addresses this by monitoring material price trends and improving forecast accuracy, achieving stable procurement through centralized purchasing and early ordering, and promoting agreement on price escalation clauses in private construction contracts.

If human or physical accidents or disasters occur during construction, or unexpected costs arise such as rework after handover, performance may be affected. The Group prepares for unforeseen events through thorough safety and health management, sharing information on past defect cases, monitoring at regular meetings, and enrollment in construction liability insurance.

The Group holds financial assets such as stocks and bonds, and performance may be affected by a decline in stock prices or in the net asset value of holdings. The Group works to reduce this risk by periodically reviewing its held assets from the standpoint of economic rationality.

The Group is subject to various laws and regulations, including the Construction Business Act, and if it receives disciplinary action or guidance from regulatory authorities for violations, its business activities may be restricted and its performance may be affected. The Group thoroughly confirms relevant laws and regulations in advance and conducts awareness activities and compliance status checks for officers, employees, and partner companies.

An increase in retirees, a decrease in new hires, and a reduction in total working hours due to the application of overtime work caps are expected, and performance may be affected through a reduction in construction capacity. The Group addresses this by promoting the industrialization of equipment installation work and consolidation of on-site management operations, and by extending the retirement age to 65 to create an environment where employees can work with peace of mind for a long time.

In implementing M&A for purposes such as business strengthening, if the expected effects at the time of acquisition are not achieved, the Group may be unable to recover its investment, potentially affecting performance. The Group manages this risk through sufficient prior investigation and examination of the target company's financial condition and earning power, as well as follow-up and regular monitoring after the acquisition.

The Group holds important information assets such as customer information, business partner information, and technical information, and if unauthorized access, ransomware, business email compromise, internal misconduct, supply chain-related incidents, cloud service outages, or similar events occur, performance may be affected by information leaks, data tampering, system outages, and the like. The Group strives to maintain and improve information security through the development of information-related regulations, implementation of organizational, personnel, physical, and technical safety management measures, and thorough dissemination of access management, log monitoring, and vulnerability countermeasures.