Dynapac Co.,Ltd.

The Group's main products, packaging materials-related products, are produced on a made-to-order basis, and fluctuations in customers' production volumes due to business partner trends, economic conditions, consumer preferences, weather, and other factors directly affect business performance. In addition, since the prices of packaging materials-related products are linked to market conditions, industry trends such as industry consolidation are also factors that can cause performance fluctuations. As both demand and prices are subject to external factors, there is a risk that securing stable earnings may become difficult.

The price of containerboard, a key raw material, fluctuates with market conditions, and rising procurement costs may put pressure on the Group's earnings. Raw material cost increases cannot always be passed on to product prices immediately, which inherently carries the risk of margin deterioration. The securities report does not describe any specific hedging measures against price fluctuation risk.

The Group is pursuing aggressive growth investments under its medium-term management plan toward 2026, and the reorganization of production systems and facilities, as well as goodwill arising from M&A, may affect business performance. If goodwill recorded through M&A is impaired in the future, there is a risk of recognizing a one-time loss. A temporary decline in production efficiency during the investment execution process is also anticipated.

The Group operates in China and Southeast Asia, and exchange rate fluctuations as well as economic and political changes in the countries where it operates may affect business performance. The Group has expanded its overseas locations in line with its users' relocation of production overseas, and responding to geopolitical risks and changes in local regulations remains an ongoing challenge. Although the Group states that it makes decisions after fully considering such risks, no specific hedging measures are described.

From the perspective of protecting the global environment, the Group is engaged in new businesses aimed at achieving a plastic-free society. However, if the business takes longer than expected to become established, or if it fails to reach the initially envisioned business scale due to future changes in the business environment, it may adversely affect business performance. There is a risk of prolonged investment recovery periods, as the initial investment burden and uncertainty regarding profitability, both characteristic of new businesses, coexist.

The Group holds securities, and interest rate trends and stock market movements may affect business performance. In a stock market downturn, valuation losses on held securities may occur, posing a risk of adverse effects on net assets and profit or loss. Details of the specific holdings, amounts, and risk management policies are not described in this section.

The Group strives to strengthen its compliance framework to prevent violations of various laws and regulations. However, if inappropriate conduct or actions contrary to corporate ethics occur, business performance may be affected due to loss of corporate trust and measures or legal proceedings taken by regulatory authorities. The packaging materials industry is closely related to safety regulations for food, pharmaceuticals, and other products, so there is a risk that the impact of legal violations could extend widely.

The Group has implemented mechanisms to prevent computer virus infections, unauthorized external access, and internal information leaks. However, if unforeseen system failures, loss of information, or leakage of information outside the company occur, production and sales activities may be disrupted, affecting business performance. In a made-to-order production system, system downtime directly leads to production delays and impacts delivery to customers, making this a significant risk to business continuity.

In the Chubu region where the head office is located, the risk of Tokai, Tonankai, and Nankai earthquakes is anticipated, and there is also a possibility of damage to employees, factories, and manufacturing facilities at domestic and overseas locations due to natural disasters such as heavy rain and flooding. The Group has formulated a BCP and has implemented measures such as installing information system hardware across multiple regions, establishing a safety confirmation system, and preparing alternative production sites. However, the risk of a significant impact on business performance in the event of a large-scale disaster remains.