DaikyoNishikawa Corporation

In FY2026 (ending March 2026), sales to the Mazda group accounted for 74.6% of consolidated net sales, creating a risk that a decline in production volume due to the Mazda group's sales trends or external factors in the supply chain would directly impact business performance. Although customer diversification is set forth as a management strategy, the degree of dependence remains high at present.

Amid intensifying price competition across the automotive industry as a whole, competition among parts manufacturers is also increasing, creating a risk that being forced to accept orders at low prices could make it difficult to maintain or expand sales and secure profitability. While the Group seeks to enhance added value through technological development in response to needs for environmental compliance, weight reduction, and low prices, if price pass-through cannot be adequately achieved, it may affect the Group's financial position and business results.

Demand for automotive-related products, which accounts for a significant portion of net sales, is greatly affected by economic trends in Japan, North America, China, Asia, and Europe. Global economic downturns or social and economic disruptions caused by the spread of infectious diseases and other factors could shrink automotive demand, potentially affecting the Group's financial position and business results.

The Group is working on developing products that substitute resin for metal and glass, and on realizing a resin recycling cycle, but there is no guarantee that long-term investment will lead to the creation of new products and technologies, and there is a risk that product value could decline rapidly due to technological advances or market changes. If the Group is unable to adequately anticipate changes in the industry and market and fails to develop and sell attractive new products, future growth and profitability may decline.

The Group conducts production and sales activities in North America, ASEAN, and China, and is exposed to various risks including unforeseen changes in laws, regulations, and tax systems, unfavorable tariff policies, labor issues, inadequate infrastructure, geopolitical risks, natural disasters, and infectious diseases. Should such events occur, they could have a significant impact on the Group's financial position and business results.

Some procured materials depend on specific suppliers, creating a risk that stable supply may not be obtained due to instability in the supply of raw materials and energy or unforeseen accidents at suppliers. Although the Group works to secure alternative sources, implement risk avoidance measures, verify suppliers' business conditions, and thoroughly manage quality, if a supply disruption occurs, it may hinder production and sales activities.

The Group has multiple overseas bases in North America, ASEAN, and China and conducts transactions denominated in foreign currencies, creating a risk that exchange rate fluctuations could affect the yen-translated value of trade receivables and payables as well as the financial figures of overseas affiliated companies. While some consolidated subsidiaries conduct forward exchange contracts to reduce this risk, complete hedging is difficult, and this may affect the Group's financial position and business results.

There is a risk of leakage or loss of confidential information or information system failures due to cyberattacks or computer viruses. Although the Group works to strengthen security through building systems for intrusion prevention, detection, and removal, as well as raising awareness and providing education for employees, if such events occur, they may affect the Group's financial position and business results.

Although the Group has established a quality assurance system from development through production based on international quality control standards, it cannot guarantee zero defects or the absence of recalls for all products. While the Group maintains product liability insurance, depending on the nature of a defect, significant additional costs could arise, potentially affecting its financial position and business results.

Although the Group has established a strict compliance system in adherence to environmental protection and product safety laws and regulations in each country, there is a risk that violations of laws or misconduct by employees could significantly damage social trust. In addition, sudden legal amendments or regulatory tightening could result in additional costs for compliance with new regulations, potentially affecting the Group's financial position and business results.