Sasatoku Printing Co., Ltd.

Major raw materials such as printing paper, ink, and plates are affected by global conditions and market fluctuations, with printing paper in particular accounting for a large proportion of raw material costs and thus having the greatest impact from price fluctuations. The Group addresses this through stable procurement via purchasing from multiple companies and planned purchasing, as well as by passing costs on to sales prices; however, if there is a time lag before such pass-through or if the pass-through is incomplete, this may affect business performance and financial condition.

The Group conducts business activities in China and Indonesia, where geopolitical risks exist, including large-scale natural disasters, war, terrorism, riots, infectious diseases, and energy supply disruptions. The China site in particular has a large degree of impact (impact level: large), and sudden changes in political and economic conditions could impede business continuity. The impact level for Indonesia is assessed as small.

Amid ongoing declines in demand for print media, the Group is pursuing new business areas such as electronics, information security, mail order, and BPO in addition to its core printing business. If the Group is unable to expand sales in these new areas, this may affect business performance and financial condition. The scope of business activities extends beyond Japan to China and Indonesia, with changes in the economic environment and demand trends in each country, as well as accelerating migration to digital media, being the main risk factors.

The Group competes with numerous companies in the markets where it operates, and intensifying price competition has led to declines in order prices. The Group continues internal efforts such as cost reduction, efficiency improvement, and development and proposal of higher value-added products, but if these efforts cannot absorb the price declines, this may affect business performance and financial condition.

There is a risk of business interruption due to larger typhoons and increased frequency of floods and droughts, as well as a risk to raw material procurement associated with changes in rainfall patterns. The Group is working on BCP formulation, GHG emissions reduction, and development of products that reduce environmental impact; however, if systems and regulations for climate change countermeasures are further introduced both in Japan and overseas, restrictions on business activities and rising costs may affect business performance and financial condition.

As the importance of information systems in business activities increases, the Group strives to enhance information security and protect data. However, if information system failures or information leaks occur due to external factors such as disasters or cyberattacks, or due to human error, this may lead to a decline in corporate image and social credibility, as well as affect business performance and financial condition.

The Group recognizes that recruiting and developing excellent personnel with advanced technical and planning capabilities is essential to securing future growth and profitability, and conducts a wide range of recruitment activities, including new graduate hiring as well as mid-career hiring. However, if the Group is unable to recruit and develop the necessary personnel, its competitiveness may decline, potentially affecting business results.

If a new infectious disease spreads globally, there is a risk that it could depress domestic and overseas economies and slow economic growth. The Group conducts business with many industries, making it difficult to accurately forecast the impact, but a contraction of the print media market to which it belongs could affect business results and other outcomes.

The Group invests in research and development to establish and develop technologies that respond to market needs, such as adapting to digital media and addressing carbon neutrality. However, if the expected results are not achieved as planned, or if unexpected rapid technological innovation occurs, this may affect business results.

Oji Materia Co., Ltd. (a wholly owned subsidiary of Oji Holdings Corporation) is a major shareholder holding 17.81% of the Company's voting rights and falls under the category of other affiliated company. The Group conducts business with the Oji Materia group at a high level in terms of raw material purchasing and product sales; however, should Oji Materia sell its shares in the Company, this could affect the liquidity and market price of the Company's shares depending on the number of shares sold and market conditions, among other factors.