Hibino Corporation

Operating audio and visual equipment as well as system design and maintenance require specialized knowledge, skills, and know-how. There is a risk that the intensification of competition for talent and accelerating labor mobility may prevent the company from securing and developing the necessary personnel as planned. This has been designated as one of the three items management recognizes as particularly important, and measures such as strengthening new graduate recruitment, promoting mid-career hiring, providing education and training, and enhancing the evaluation system are being implemented.

The company relies heavily on information systems for its operations, and there is a risk that system failures caused by cyberattacks or unauthorized access, or the leakage of customer, business partner, or confidential information, could result in significant impacts such as business suspension, loss of credibility, and damages liability. This has been designated as one of the three items management recognizes as particularly important, and measures such as multilayered defense systems, regular equipment replacement, obtaining Privacy Mark certification, and conducting cyberattack response training are being implemented.

The company procures much of its audio and visual equipment from overseas manufacturers, and instability in the international situation caused by competition among major powers, geopolitical risk, trade policy, and tariff measures could give rise to risks such as delays in product supply, increases in procurement prices, and rising transportation costs. This has been designated as one of the three items management recognizes as particularly important, and measures such as information gathering, impact analysis, maintaining appropriate inventory levels, and agile revisions of selling prices are being implemented.

The company positions aggressive M&A as a cornerstone of its growth strategy in order to promote its "honeycomb-type management" approach, but there is a risk that changes in the business environment following an M&A could cause a divergence from performance plans, or that failure to achieve synergies due to inadequate post-merger integration could make it difficult to recover the invested capital. Currently, 20 domestic companies and 5 overseas companies are subsidiaries acquired through M&A, and the company addresses this risk through detailed due diligence and monthly performance monitoring.

In the professional audio and visual industry, technology is evolving and changing markedly, and there is a risk that delays in responding to changes in technology and market needs, or failure to allocate resources appropriately to priority technology areas, could result in the obsolescence of products and services and a decline in competitiveness. Even where the company is able to respond, this may require substantial expenditure on research and development, and the company addresses this through staying abreast of the latest technology information, continuous investment in new technologies, and new business development through "Hibino Innovation Activities."

In the audio and visual equipment sales and installation business, in addition to the recent intensification of low-price competition, in the concert and event services business there is a risk that rapid technological innovation could render held equipment obsolete or commoditized, making it difficult to differentiate through equipment alone. Competition is intensifying not only with companies from advanced Western economies but also with companies from emerging growth economies, and the company is responding through providing total solutions, proactive capital investment, and transforming its business model toward human capital.

Import distributor agreements with overseas manufacturers often set minimum purchase amounts, creating a risk regarding contract renewal if import performance falls short, as well as a risk of change in distributors due to divergence from the manufacturer's product strategy or through acquisitions and mergers. If it becomes difficult to continue a trading relationship, this could affect business results and financial condition, and the company mitigates the risk of dependence on specific suppliers by securing import distribution rights for numerous excellent brands.

With the advancement of business globalization, there is a risk that fluctuations in foreign exchange rates could affect sales and procurement costs denominated in foreign currencies as well as the yen-converted amounts of the financial statements of overseas consolidated subsidiaries. The company works to mitigate foreign exchange risk through promoting yen-denominated transaction negotiations, hedging transactions such as forward exchange contracts, monitoring fluctuations in major currencies, and appropriately reflecting these in selling prices.

Corporate sales promotion activities and the number and scale of events held tend to fluctuate with economic conditions, and there is a risk that deteriorating economic sentiment could lead companies to curtail capital investment and reduce public investment, resulting in the cancellation or postponement of projects. The company seeks to minimize the risk of domestic economic fluctuations through business diversification via its "honeycomb-type management," building a broad customer base, and global four-region expansion aimed at a 30% overseas sales ratio target.

The company is subject to a wide range of laws and regulations, including the Construction Business Act, the Product Liability Act, the Electrical Appliance and Material Safety Act, the Antimonopoly Act, the Subcontract Act, and the Labor Standards Act, and there is a risk that changes to or tightening of laws and regulations, or violations of law, could affect its credibility, business results, and financial condition. The company strives to prevent illegal conduct in advance and detect it early through thorough enforcement of the "Hibino Group Code of Conduct," the establishment of an Internal Control Committee and a Compliance Committee, internal audits, and an internal whistleblowing system.