Rasa Industries, Ltd.

The Group sells products targeting the electronic components and devices market across multiple businesses, including high-purity phosphoric acid for semiconductor manufacturing processes in the Chemical Products Business and high-purity inorganic materials for compound semiconductors in the Electronic Materials Business. This market is prone to sharp fluctuations in demand. A sudden decline in demand would directly affect business performance and financial condition through decreased sales. The Group responds by monitoring market trends, exchanging information with business partners, carefully timing investments, and pursuing higher value-added products and new product development.

Yellow phosphorus, the main raw material for the Chemical Products Business, is dependent on imports from overseas, creating an inherent risk of sharp price spikes or collapses due to changes in each country's institutional systems, power supply conditions, and global supply-demand fluctuations. When prices rise, there is a need to pass costs on to product prices, while during periods of easing, concerns arise over inventory valuation losses; decreased sales, increased costs, and inventory valuation losses may adversely affect business performance. The Group seeks to secure stable supply through diversification of procurement routes, but this does not completely eliminate the risk.

The Group conducts foreign currency-denominated transactions through product exports and raw material imports, and large fluctuations in exchange rates may affect business performance and financial condition through declines in sales unit prices and increases in costs. In addition, translation differences arising when converting the financial results of overseas consolidated subsidiaries into yen may affect shareholders' equity. The Group hedges through forward exchange contracts and other means, but may not be able to fully respond to large fluctuations.

The Group raises funds through borrowings, and changes in market conditions such as interest rates may increase funding costs. There is also no guarantee that refinancing of existing borrowings or new borrowings can be executed under the same terms, creating a risk that raising the necessary funds may become difficult. The Group addresses this by maintaining broad relationships and close communication with multiple financial institutions, but if this risk materializes, it could have a significant impact on fundraising.

The Group's business activities are heavily dependent on information systems, and if communication network failures, hardware or software malfunctions, or cyberattacks such as ransomware occur, this could affect overall business activities, including the suspension of production and shipping or interruption of service provision. As a manufacturer, there is also a risk of supply chain disruption, which raises concerns about the impact on business performance.

A major accident could cause physical and human damage as well as environmental contamination, affecting production and undermining social trust. Large-scale disasters such as earthquakes and typhoons could damage production facilities, leased properties, and sales offices, or reduce sales due to damage suffered by customers, and could also result in equipment repair costs. Domestic and international conflicts such as war could affect the supply chain, potentially causing disruptions in business and product supply as well as increased costs.

The Group is expanding overseas, including establishing production bases primarily in Asia, but unexpected changes in laws and regulations in the countries where it operates, or social unrest due to political factors, could impede business continuity. Although the Group expands while confirming political stability and legal conditions, risks may materialize over time, potentially affecting business performance and financial condition.

The Group strives to ensure quality through thorough inspection of raw materials and products and management of production processes, but unexpected defects in raw material quality, among other factors, could cause damage attributable to products. The occurrence of damages could affect business performance and financial condition; while the Group carries product liability insurance, this does not eliminate all risk.

The Group holds numerous tangible and intangible fixed assets, including business-use real estate, and impairment accounting may become necessary in the event of unexpected changes in the business environment, declines in market value, or situations where expected cash flows cannot be generated. The occurrence of impairment losses would adversely affect business performance and financial condition. The Group responds through careful consideration of profitability and capital recovery and through cost reductions, but complete avoidance is difficult.

A widespread outbreak or spread of infectious disease could lead to decreased sales and higher raw material costs through a global decline in demand and disruption of the supply chain, potentially having a material impact on business performance and financial condition. There is also a risk that business could stagnate or halt due to Group employees becoming infected. The Group implements business continuity measures such as thorough hygiene management, use of web conferencing systems, and changes to work shifts, but these do not completely eliminate the risk of infection.