KUREHA CORPORATION

As the Company conducts business globally, changes in customer trends and market conditions both domestically and overseas, shifts in economic policy among various countries, and the materialization of geopolitical risks may disrupt the stable procurement of raw materials and fuel. In addition, capacity expansion or low-price sales by competitors may lead to a decline in product market share or product prices. As countermeasures, the Company is promoting business diversification across five segments, monitoring the business environment, and diversifying raw material procurement sources.

Functional Products, which accounts for a high proportion of sales, faces intense technological competition, making continuous differentiation essential; failure to achieve sufficient differentiation may lead to a decline in competitiveness. Fluctuations in domestic and overseas supply-demand conditions, the emergence of alternative materials, and competitors' sales strategies may also affect business performance. As countermeasures, under the "FY2035 Long-Term Management Plan," the Company is actively promoting the development and strengthening of Chemical Products including the life science field, as well as M&A and collaboration/alliances with other companies.

If significant deterioration in the business environment or other factors prevent the Company from achieving planned earnings, it may become unable to recover investments in management resources, including capital expenditures, potentially resulting in a decline in asset value or business value. As countermeasures, the Company has established internal investment profitability standards, conducts multifaceted verification of commercial and technical risks, and regularly monitors business profitability using ROIC while reallocating management resources.

If progress management of development themes and decision-making on the direction of technology development do not function adequately, this may cause delays in new product development and a decline in product development capability, thereby reducing market competitiveness. In addition, if the succession of core technologies and know-how and the development of human resources are not carried out appropriately, it may become difficult to secure a mid- to long-term technological advantage. As countermeasures, the Company conducts regular monitoring of development themes based on the mid- to long-term management plan, deliberates on direction through technology meetings, and has established a collaborative framework among the R&D, production, and technology departments.

As a transition risk, cost increases due to carbon pricing and rising raw material/fuel and energy prices, increased transition costs from the Company's own coal-fired power plant, and reputational decline due to delays in GHG emission reduction plans may put pressure on earnings. As a physical risk, natural disasters caused by extreme weather may damage manufacturing plants, halt production, and increase repair costs. As countermeasures, aiming to achieve carbon neutrality by FY2050, the Company is working to reduce CO2 emissions centered on the Sustainability Promotion Committee and the Green Transformation Subcommittee.

In Europe, a review process is underway for a proposal to comprehensively regulate over 10,000 types of organic fluorine compounds (PFAS) in principle, and if the Polyvinylidene Fluoride Resin (PVDF) sold by the Company becomes subject to such regulation, it could have a material impact on business performance. In addition, the introduction of new environmental regulations or significant environmental impacts arising from business activities may also affect operating results. As countermeasures, the Company is engaging with industry associations to advocate for regulatory frameworks based on scientific evidence, and the Responsible Care Subcommittee is collecting environment-related information and monitoring regulations.

Due to changes in the domestic environment such as the declining birthrate, aging population, and shrinking labor force, as well as changes in the employment environment at overseas locations, if the acquisition and development of specialized technical personnel and management talent does not proceed as planned, it may significantly affect business development, performance, and business growth. As a countermeasure, the Company has designated "Promotion of Human Capital Management" as a materiality issue, and is focusing on the development and utilization of human resources, fostering a spirit of challenge, creating a comfortable working environment, and promoting health management as key initiatives.

If cyberattacks, unauthorized access, system failures, or similar incidents occur, information leakage, data loss, or system outages may disrupt business and production activities. Leakage of personal information or trade secrets also carries the risk of damages claims and loss of public trust. As countermeasures, the Company implements security measures such as access rights management and monitoring of operation logs, conducts information security education and targeted email attack drills for employees, and has established a backup system for manufacturing operation control systems.

If the Company continues to rely on existing systems and fails to introduce and utilize new technologies, this may lead to reduced operational efficiency, human error, and increased workload, preventing improvements in productivity and competitiveness. If the human resources and organizational structure necessary for promoting DX cannot be sufficiently secured, this may also hinder the securing of a competitive advantage. As countermeasures, the Company is advancing the formulation and revision of a DX roadmap through the DX Executive Committee, establishing guidelines for new technologies such as generative AI, and strengthening its promotion framework through the recruitment of IT personnel and the use of external resources.

Violations of various business laws, the Antimonopoly Act, labor-related laws and regulations, and other legal requirements may result in criminal penalties, administrative sanctions, or claims for damages, while inappropriate conduct such as harassment may lead to a decline in public trust and damage to corporate value. Issues related to human rights or compliance in the supply chain also carry the risk of transaction suspension or reputational decline. As countermeasures, the Company newly established the Compliance Committee and the Compliance Department in October 2025, and is strengthening its framework through hierarchy-specific training, e-learning, the establishment of consultation contact points, and supplier surveys.