INABA SEISAKUSHO Co.,Ltd.

Because the business structure is specialized in domestic sales, a decline in new housing starts, significant fluctuations in the supply trends of newly constructed office buildings, and shrinking demand due to sharp increases in material prices could adversely affect business performance and financial condition. The long-term downward trend in housing demand associated with population decline is also a matter of concern. As countermeasures, the Group continues efforts to enhance added value, develop new applications, and expand market share, while also strengthening its stable supply system by maintaining appropriate inventory levels of raw materials and products.

Steel, paint, parts, materials, and other items are procured from multiple suppliers outside the Group. If a shortage of raw materials or parts occurs due to price surges or shortages caused by market changes, or accidental incidents at suppliers, this could lead to increased manufacturing costs or production stoppages. As countermeasures, the Group implements multiple sourcing, consolidation with suppliers offering higher profitability, strengthened communication with suppliers, regular quality testing, and securing safety stock levels, in addition to passing on price increases to selling prices.

The steel storage shed market is small in scale and oligopolistic, while the office furniture market is highly competitive, centered on major players, with strong pricing pressure. The Group is susceptible to the influence of competitors' pricing, and pricing pressure or a decline in competitiveness leading to customer attrition could adversely affect business performance and financial condition. As countermeasures, the Group is working to differentiate itself by launching value-added products, maintaining cost competitiveness by leveraging active capital investment and a high in-house production ratio, and improving production efficiency through the standardization of product components.

There is no guarantee that all products are free of defects and will not be subject to future recalls; if a large-scale recall or product liability claim occurs, it could result in significant costs and a decline in reputation leading to reduced sales. Although the Group has product liability insurance, there is no guarantee that it will sufficiently cover the final amount of damages. As countermeasures, the Group has established a continuous quality control system, including proprietary testing at the development stage, holding quality control committee meetings, and long-term testing at the Okinawa exposure test site.

In the Office Furniture business, sales are structurally dependent on the business performance and business policies of specific business partners. If sales decline or business relationships are terminated due to changes in the business policies of specific business partners, this could adversely affect business performance and financial condition. As countermeasures, the Group strives to maintain strong relationships of trust through building cooperative relationships from the product planning, design, and development stages, and through sharing issues and exchanging information via regular meetings between management.

Against the backdrop of growing concerns over global warming, resource depletion, and environmental pollution, various environmental regulations are expected to continue to be revised and strengthened, and insufficient responses could lead to reduced product sales, limited production volumes, and reputational decline. As a transition risk toward a decarbonized society, there is a risk of losing sales opportunities if current products cannot comply with tightened regulations, as well as physical risks such as factory operation stoppages and supply chain disruptions due to the worsening of abnormal weather events such as large typhoons and floods. As countermeasures, the Group is working on adopting powder coating, introducing designs for material separation, and continuously improving its environmental management system.

The threat of fraudulent activities such as cyberattacks is increasing, and if the Group experiences a cyberattack that significantly exceeds expectations, it could result in the interruption of important operations and leakage of confidential information, leading to a loss of competitiveness and reputational decline. In addition, network failures or system malfunctions and defects could also lead to business interruptions and reduced productivity. As countermeasures, the Group strives to protect information assets by establishing internal regulations on information security, implementing unauthorized access prevention measures, updating core systems and other systems in a timely manner, and conducting employee education.

In the event of a large-scale natural disaster, accident, epidemic, or other event, production lines could be interrupted, potentially leading to reduced sales due to the suspension of production and sales activities. As countermeasures, the Group is working on disaster mitigation measures such as distributing factories, conducting regular equipment inspections, introducing safety confirmation systems, conducting disaster prevention drills, formulating business continuity plans, and taking out casualty insurance; however, there is no guarantee that the impact can be completely prevented or mitigated.

Despite ongoing efforts to practice compliance, the Group may become a party to litigation or legal proceedings by regulatory authorities, and if a serious compliance violation or large-scale damages claim occurs, it could result in significant damages payments, suspension of business activities, and damage to brand image. In the event that litigation or other legal proceedings occur, the Group has established a system to respond appropriately and in a timely manner in cooperation with outside experts, in order to minimize the impact.

Although the prohibition of human rights violations is explicitly stated in various harassment prevention regulations and the basic sustainability policy, if a compliance violation due to discrimination or harassment occurs, it could result in a loss of social credibility and adversely affect business performance and financial condition. The Group strives to reduce this risk by sharing and thoroughly implementing policies across the entire Group.