ICHIKAWA CO., LTD.

Demand for the company's core products, Paper Machine Felt and Paper Machine Belt, is highly dependent on trends in domestic paper and pulp production, and there is a risk that demand for domestic newsprint and printing/communication paper will decline as the shift from paper media to digitalization accelerates. In overseas markets, there is also a risk that profitability may decline due to intensifying price competition and other factors. As a countermeasure, the company is promoting optimal proposals of its own products tailored to customer needs and the provision of energy-saving and environmentally friendly products.

Since the company's main raw materials are petroleum-related materials, raw material costs and procurement may be affected by surges in crude oil prices and trends in petrochemical industry production. Geopolitical risks, centered on the situation in the Middle East, remain an ongoing concern. The company is addressing this by considering alternative raw materials and reviewing procurement sources both domestically and overseas.

The overseas sales ratio was 63.4% in the current consolidated fiscal year (60.5% in the previous fiscal year), a high level, and exchange rate fluctuations may affect business performance and financial condition. Short-term impacts on foreign currency-denominated accounts receivable are mitigated through the use of forward foreign exchange contracts, but a risk remains that significant medium- to long-term fluctuations cannot be fully addressed. By holding a portion of foreign currency-denominated sales as foreign currency deposits, the company also prepares for lump-sum payments when purchasing overseas equipment.

As of the end of March 2026, the company held interest-bearing debt of ¥882 million, and future interest rate increases may increase financial costs and affect business performance. There is also a risk that trends in long-term interest rates could affect performance in connection with fundraising for future growth investments and M&A. On the other hand, the company holds sufficient cash on hand and manages it appropriately while ensuring safety and liquidity.

As of the end of March 2026, the company held investment securities of ¥7,257 million (with unrealized valuation gains of ¥5,592 million), bearing the risk that valuation gains and losses may fluctuate significantly due to stock price movements. These holdings are mainly shares of major customers and business partner financial institutions, and a deterioration in market conditions could affect the company's financial condition. The Board of Directors reviews the rationale for holding each individual stock every year and follows a policy of reducing holdings that do not justify their cost of capital.

If production facilities or infrastructure are damaged by natural disasters such as earthquakes or wind and flood damage, business operations could be significantly affected through suspension or delay of manufacturing, potentially making it impossible to secure performance. Given the high dependence on equipment as a manufacturing company, the impact of such damage could be extensive. The company has established recovery procedures in its

If cyberattacks, unauthorized access, information leaks, or similar incidents materialize, they could disrupt business continuity through the shutdown of core systems, delays in production activities, and leaks of customer information. This could affect business performance and financial condition through the incurrence of recovery costs, liability for damages, and a decline in social credibility. In addition to developing internal regulations, managing access privileges, collaborating with external specialist vendors, and providing employee training, the company has formulated an IT-BCP to minimize the impact in the event of an incident.

If a global economic slowdown disrupts production systems, logistics systems, sales activities, and the like, it could significantly affect the performance of the company's group. As a company that operates globally, its exposure to this risk is increasing along with the rising ratio of overseas sales. Disclosure in the securities report regarding specific countermeasures is limited, and continuous monitoring is required.