FURUBAYASHI SHIKO CO.,LTD.

Changes in domestic personal consumption demand due to price increases and economic fluctuations may affect order-taking activities. In addition, at consolidated subsidiaries in China, there is a risk that the market environment and laws and regulations may change due to sudden shifts in local economic trends and social conditions. As a countermeasure, the Company conducts business with customers across a wide range of industries to avoid dependence on specific customers.

As a specialized packaging manufacturer, the Company competes with numerous rivals for orders, and in some markets, order prices have fluctuated due to intensifying competition. Further intensification of competition may directly affect business performance. The Company addresses price fluctuations by offering high-quality, high-performance, low-cost products leveraging its proprietary technology and development capabilities, and by appealing to the added value of design and other service-related aspects.

Raw material prices fluctuate depending on market conditions influenced by crude oil prices, supply-demand relationships, and exchange rates, as well as rising labor and logistics costs. If purchase prices rise sharply due to sudden market changes and cannot be adequately passed on to selling prices, this may adversely affect business performance. The Company addresses this through coordination between the sales and purchasing departments to manage and negotiate unit trading prices.

The Company procures raw materials from external manufacturers, and if supply restrictions or production suspensions occur due to changes in supplier relationships, overseas conditions, or deterioration in suppliers' financial condition, this may affect business performance. The Company strives to appropriately select suppliers to ensure stable procurement of raw materials and maintain optimal procurement prices.

The Company is subject to environmental laws and regulations concerning climate change, air, water, and soil pollution, hazardous substances such as organic solvents, waste disposal, and recycling, and tightening of such regulations or increased obligations to remove hazardous substances may affect business performance. The Company promotes initiatives such as reducing CO₂ emissions through energy conservation, improving material usage efficiency, and reducing waste, and has set a target of achieving a 30% ratio of non-fossil electricity to total electricity used by 2030, having achieved 25.6% in FY2025 (ending March 2025).

If large-scale earthquakes, natural disasters, or pandemics of infectious diseases cause production activities to halt, loss or damage of assets and information, impact on business partners, or paralysis of logistics functions, this may affect business performance and financial condition. The Company implements fire prevention and earthquake resistance measures at key facilities and diversifies production sites, while also enhancing inspection, training, and communication systems, and promoting outsourcing through cloud-based information management.

If system failures, computer virus infections, unauthorized external access, or similar incidents occur, causing temporary suspension of business activities or leakage of confidential and personal information internally or externally, this may affect business performance and financial condition. The Company works to reduce this risk through establishing backup systems, strengthening firewalls, utilizing monitoring software, and providing education and training for employees.

The Company has consolidated subsidiaries consisting of two companies in China and one in Taiwan, and since local currencies are primarily used for local settlements, actual foreign exchange risk is mitigated. However, since the assets, liabilities, revenues, and expenses of consolidated subsidiaries are translated into yen at the spot exchange rate on the balance sheet date, significant exchange rate fluctuations beyond expectations may affect business performance and financial condition.

The Company holds fixed assets such as facilities and real estate used for business purposes, and if changes in market conditions or the business environment make it impossible to expect recovery of the invested amount, impairment accounting may be required, affecting business performance and financial condition. The Company manages profitability by business site and strives for early detection of impairment risk by taking measures as necessary.

Amid a declining working-age population due to the falling birthrate and aging society, if the Company is unable to secure and develop human resources as planned, this may affect its business, performance, and financial condition. The Company is working on labor reforms, including creating workplaces where both men and women can work, reducing annual scheduled working hours by 3.0% in wage-equivalent terms, and promoting the use of paid leave, while also developing next-generation management executives internally through placement at each business site.