Superbag Company, Limited

The purchase prices of raw materials for shopping bags in the Chemical Products Business (petrochemical products such as polyethylene) and for the Paper Products Business fluctuate in tandem with crude oil price movements, which may affect business performance and financial condition. The Group seeks to mitigate this impact through continuous negotiations on revising overseas procurement prices and domestic selling prices.

Both the Paper Products and Chemical Products segments engage in foreign-currency-denominated import and export transactions, and movements toward yen depreciation compress profitability through higher purchase prices. The import ratio for shopping bags in the Chemical Products Business remains high at 93.2% in FY2026 (ending March 2026), and although the Group hedges through forward foreign exchange contracts, it is not possible to eliminate the risk entirely.

If a business partner's financial condition deteriorates or it becomes unable to make payments, additional allowance for doubtful accounts may need to be recorded, which could affect business performance and financial condition. The Group strives to minimize bad debt losses through thorough credit management based on day-to-day sales activities and information from credit research agencies and industry sources.

With respect to shares of specific customers and financial institutions held to maintain long-term business relationships, deterioration in market conditions or poor performance of investees may necessitate recording valuation losses. The Board of Directors periodically reviews the appropriateness of holding individual securities, taking into account both benefits and impairment risk.

With respect to fixed assets such as manufacturing equipment, factory buildings, land, and machinery, a decline in business profitability or a significant drop in land prices could result in impairment losses, which may affect business performance and financial condition. The Group addresses this by periodically reviewing the recoverability of residual asset values based on future cash flows.

Retirement benefit expenses and obligations are calculated based on actuarial assumptions such as the discount rate, as well as the fair value and expected rate of return of pension assets. If actual results diverge from these assumptions, or if the discount rate declines or investment returns worsen, expenses and obligations may increase, potentially affecting business performance and financial condition.

As the Group has manufacturing and sales bases in Japan and across Asia, large-scale natural disasters such as earthquakes and storm/flood damage, or the emergence of new infectious diseases, could strain the product supply system or cause demand to contract. The Group seeks to diversify this risk by maintaining multiple bases both domestically and overseas and by utilizing cooperating overseas factories in multiple Southeast Asian countries, but the impact cannot be entirely eliminated.

As the majority of revenue depends on sales of products based on existing materials, specifications, and standards, failure to anticipate and develop new products and technologies that meet customer needs could reduce future growth and profitability. In addition, if a significant quality issue beyond expectations occurs, it could seriously damage the overall reputation of the Group's products; the Group addresses this through manufacturing in accordance with international quality control standards.

The Group is subject to legal regulations such as environmental regulations and intellectual property laws, and if litigation arises and a ruling unfavorable to the Group is made, this may affect business performance and financial condition.

Against the backdrop of concerns over plastic marine pollution, mandatory charging for plastic shopping bags began in July 2020, causing a significant decline in shopping bag sales. If regulations on waste plastics under the Plastic Resource Circulation Strategy are further tightened in the future, demand in the Chemical Products Business may decline further, potentially affecting business performance and financial condition. The Group is addressing this through initiatives such as developing shopping bags made using marine biodegradable plastics.