Central Glass Co.,Ltd.

Regulations concerning PFAS (organofluorine compounds) are being strengthened, particularly in Europe, which may result in decreased demand or sales restrictions for fluorine-related products manufactured and sold by the Group. In response, the Group has submitted public comments to European authorities, in addition to advancing the development of PFAS-free alternative products, some of which have already been brought to market.

Strengthening or new application of environmental laws and regulations in various countries and regions poses a risk of increased cost burden, liability claims, suspension of manufacturing or sales, and constraints on raw material procurement. The introduction or tightening of GHG emissions regulations, carbon taxes, and emissions trading systems may also be a factor increasing costs. The Group continuously monitors domestic and international regulatory trends, and is advancing efforts such as assessing the impact of transition risks and physical risks based on the TCFD framework and utilizing renewable energy.

Sudden changes in domestic and overseas economic conditions, deterioration in the supply-demand environment of related industries, and policy changes in various countries may lead to decreased product demand, declining sales prices, and worsening profitability. The Group monitors market conditions on an ongoing basis and has established a system to swiftly grasp the impact on its business.

There is a risk of lost sales opportunities and reduced profitability due to intensifying price and product development competition with domestic and overseas competitors. In addition, if R&D themes aimed at creating next-generation businesses fail to reach commercialization due to technological innovation or market changes, the Group may be unable to secure a competitive advantage. The Group has established a system for selecting R&D themes, allocating management resources, and evaluating progress, while working to improve quality and technological capability and reduce costs.

Certain products have a high degree of dependence on specific customers, and changes in such customers' investment or sales plans may lead to decreased sales volume and reduced profitability. In addition, for products with a high dependence on specific raw materials, procurement constraints may result in lost sales opportunities. The Group is promoting diversification of sales destinations through the development of new customers and efforts toward stable procurement of raw materials.

The Group uses raw materials affected by market fluctuations such as heavy oil, as well as specialty raw materials with limited procurement sources. Price fluctuations, procurement constraints, or procurement delays may lead to increased procurement costs and impacts on production. The Group is working to secure stable procurement and reduce price fluctuation risk through diversification of procurement sources, stockpiling of key raw materials, and use of crude oil derivatives.

As the Group conducts business activities across various regions worldwide, fluctuations in foreign exchange rates may lead to declines in sales prices or increases in raw material procurement costs, potentially affecting business results and financial condition. To mitigate this risk, the Group utilizes hedging transactions such as foreign exchange forward contracts as appropriate to the situation.

The increasing sophistication and diversification of cyberattacks, as well as system failures or cloud service outages, pose a risk of disrupting business activities such as production, sales, and R&D if IT systems become inoperable. In addition, the loss, tampering, or external leakage of important data, including personal information, may also affect business results and financial condition. The Group continuously strengthens its information security management system and implements network monitoring and cyberattack countermeasures.

In an increasingly competitive business environment, difficulty in securing personnel with diverse skills and knowledge, or the departure of key personnel, may cause business stagnation, delayed decision-making, and quality deterioration. In addition, insufficient succession of critical skills and know-how related to plant operations to successors may lead to stagnation of business activities and reduced competitiveness. The Group is working to secure and develop talent through human capital management initiatives such as improving engagement, promoting diversity, and promoting health-oriented management.

If facilities are damaged by natural disasters such as earthquakes or typhoons, or by accidents such as fires, operations may be partially or fully suspended, resulting in the suspension or delay of product shipments and significant facility repair costs. Increases in natural disasters such as flooding due to climate change and deteriorating working conditions due to rising temperatures are also factors that heighten the risk of operational suspension and quality deterioration. The Group is promoting measures such as ongoing training, establishing business continuity systems, data backup, and securing inventory.