TOMOKU CO., LTD.

The Corrugated Cardboard business, Housing business, and Transportation & Warehousing business are all affected by economic conditions, consumer trends, housing policy and interest rate trends, and overseas local economic conditions. If economic conditions deteriorate or the market declines, this may affect business results. As a countermeasure, the Group is working to strengthen competitiveness through new product development and value-added proposals.

Increased demand for or tightness in Corrugated Cardboard raw materials, as well as procurement difficulties for materials such as timber for Housing due to large-scale disasters or geopolitical risks in Japan and overseas, may cause construction delays. Fuel prices are also subject to cost fluctuation factors due to geopolitical risks and exchange rate movements, and if price pass-through is difficult, this may affect business results. The Group addresses this through diversification of suppliers, establishment of a stable procurement system, and consideration of introducing energy-saving equipment.

The yen-converted amounts of assets and liabilities associated with foreign currency transactions, as well as the prices and sales of foreign currency-denominated products, are affected by fluctuations in exchange rates. The Group is also exposed to interest rate fluctuation risk through variable-rate borrowings, and when interest rates rise, the interest burden on borrowings may increase.

If large-scale earthquakes, typhoons, or other natural disasters, or the spread of infectious diseases, cause severe damage to production, logistics, and sales sites or disrupt transportation routes, this may have a material impact on business results. The Group strives to minimize risk by establishing crisis management systems, including a system for confirming employee safety and building backup systems.

Rising raw material costs due to abnormal weather, physical damage from natural disasters, and significant cost increases due to tightening environmental regulations aimed at a decarbonized society may affect business results. The Group discloses risks and countermeasures based on the TCFD recommendations, with details published on its website.

The Group is subject to a wide range of laws and regulations, including the Product Liability Act, the Building Standards Act, the Construction Business Act, the Motor Truck Transportation Business Act, the Warehousing Business Act, and the Act on the Protection of Personal Information, and bears the risk of being subject to lawsuits in Japan and overseas. Amendments to or the introduction of new legal regulations, or the outcome of litigation, may affect business results, and the Group seeks to reduce this risk through compliance education and training.

If impairment accounting becomes necessary for fixed assets held by the Group in the future, this may affect business results. While the Group applies accounting treatment for impairment, there is a risk that the recoverability of the book value of assets could decline due to deterioration in the business environment or other factors.

The Group holds personal information of customers and business partners as well as confidential business and technical information. If unauthorized access, cyberattacks, computer viruses, or other incidents result in information leakage, destruction or tampering of important data, or system downtime, this may lead to a decline in social credibility and affect business results and financial reporting. The Group strives to minimize this risk through thorough compliance, strengthened security measures, and audits.

If a serious accident occurs at transportation operations or Housing construction sites, this may affect business results due to a decline in social credibility, liability for damages, and damage to the brand. The Group works to foster a safety-focused culture through safety inspections, introduction of vehicles with the latest safety features, education using driving simulators, and regular on-site inspections.

With the advancing decline in birthrate and aging population, securing construction technicians, drivers, and other personnel has become an important issue. If sufficient personnel cannot be secured, this may affect business results through construction delays, increased outsourcing costs, and higher recruitment costs. The Group strives to secure and retain personnel through strengthened recruitment activities, enhanced education and training programs, promotion of diversity, and health management initiatives.