SK KAKEN CO.,LTD.

Trends in public investment, private capital investment, and housing investment, as well as the declining birthrate, aging population, and population decline, may affect net sales. In response to the risk of a shrinking new-build market, the company is working to create renovation demand in the renewal market, which has a large stock of existing housing.

Price competition is severe for general-purpose products, and a decline in selling prices may have a significant impact on business results. The company addresses this through differentiation using patented technologies and original products, new product development and improvement, and reductions in raw material costs.

Although products are manufactured in accordance with various quality control standards, there is no guarantee that defects will be completely eliminated in the future. Even though the company carries product liability insurance, if a large-scale product defect occurs, the amount of compensation may not be sufficiently covered, which could have a significant impact on business results.

The company has expanded into China and other parts of Asia, and if unexpected changes in laws and regulations, adverse political or economic factors, or social disruption due to terrorism or war occur, this could lead to the suspension or restriction of manufacturing and sales activities. These geopolitical risks could have a significant impact on business results.

Overseas sales accounted for 14.9% of consolidated net sales in the fiscal year under review, and are affected by exchange rate fluctuations. Although measures such as forward exchange contracts are taken as necessary, significant exchange rate fluctuations could have a significant impact on business results.

Although regular disaster-prevention inspections, equipment maintenance, and safety equipment investments are carried out for manufacturing facilities, if manufacturing facilities are damaged by a sudden disaster, natural calamity, or unforeseen accident, this could affect production capacity and have a significant impact on business results.

The company promotes energy conservation and the development of new products and construction methods using greenhouse gas emissions (Scope 1 and 2) as an indicator, but risks such as loss of stakeholder trust due to delayed environmental response, increased raw material and logistics costs due to soaring fossil fuel prices, and increased energy costs due to carbon taxes or stricter regulations could have a significant impact on business results.

The company uses many petrochemical products as raw materials and addresses this by maintaining sufficient inventory, but if instability in regions such as the Middle East occurs or becomes prolonged, there is a risk of increased manufacturing costs due to soaring crude oil and naphtha prices, and a shortage of raw material supply. These could have a significant impact on business results.