DIC Corporation

A sharp appreciation of the yen could worsen export profitability and reduce the yen-equivalent value of overseas subsidiaries' earnings, while an expanding negative foreign currency translation adjustment could erode net assets and worsen the financial balance. Gross interest-bearing debt stands at approximately ¥400 billion, and a 1% rise in interest rates carries a risk of increasing annual interest payments by approximately ¥45 million over the medium term. The Group addresses this through the use of forward contracts, hedging policies formulated by the Foreign Exchange Risk Management Committee, maintaining an 80% long-term funding ratio, and diversifying maturity dates.

A prolonged downturn in the European and Chinese economies, or political and economic turmoil in emerging countries, could lead to a global sudden decline in demand and delayed recovery. Combined with a sharp drop in personal consumption and currency depreciation, this could significantly impact the Group's business performance. In response, the Group conducts regular monitoring of global political and economic conditions and reviews its regional portfolio to diversify risk.

Economic security measures stemming from US-China tensions, such as import/export suspensions and sharp tariff increases, as well as energy price surges and logistics disruptions caused by conflicts in the Middle East, could impact business performance and financial condition. There are also concerns about restrictions on local operations due to tightened travel regulations and supply chain disruptions. The Group addresses this through daily monitoring by regional headquarters companies, establishing BCPs, and building multiple procurement systems.

In the event of a Nankai Trough earthquake or an earthquake directly beneath the Tokyo metropolitan area, seismic intensity of approximately 6 is anticipated at the Yokkaichi, Sakai, Tokyo, Saitama, and Chiba plants, potentially causing production stoppages, equipment damage, and logistics disruptions lasting weeks to months. The Group recognizes that a large-scale earthquake in Japan, where its head office functions are located, would have a serious impact on business continuity. It addresses this through revising BCP management indicators, utilizing the disaster crisis management portal

In corporate acquisitions and capital alliances actively pursued to transform the business portfolio, if integration or collaboration proves insufficient or does not proceed as planned, the anticipated effects may not be realized, impacting business performance and financial condition. If performance deteriorates after an acquisition, delays in structural reform and efficiency improvements could also worsen results. The Group addresses this through thorough due diligence utilizing external institutions and actions aimed at promoting PMI and realizing synergies.

If the concentration of management resources on priority business areas under Phase 2 (2026-2030) of

Cyberattacks such as ransomware causing unauthorized network intrusion, theft of confidential information, and prolonged IT system outages; internal misconduct involving the removal or falsification of important information; and inappropriate use of generative AI leading to external disclosure of confidential information could disrupt business processes, production lines, and supply chains. There are also concerns about errors in financial reporting or loss of investor confidence due to destruction or falsification of financial data, as well as loss of technological advantage and competitiveness. The Group addresses this through third-party security assessments, penetration testing, establishment of generative AI guidelines, and ongoing employee awareness activities.

Declining birthrates in developed countries, leading to a shrinking labor force, combined with intensifying competition for talent, is making it difficult to secure personnel who meet expected standards. As labor market fluidity increases, the departure of talented personnel could make business continuity difficult. The Group addresses this through enhanced recruitment communications for new graduates, considering more flexible starting salary levels, utilizing diverse recruitment channels such as alumni and referral hiring, and strengthening the PDCA cycle for engagement surveys.

Policy implementation such as emissions trading and fossil fuel levies could raise raw material and electricity prices; delayed response to rapid demand shifts toward a circular society; and business site shutdowns or unstable raw material procurement due to extreme weather could lead to reduced profitability. There is also a risk of greenwashing litigation due to inappropriate information disclosure. The Group addresses this through third-party certification of its product carbon footprint calculation guidelines (announced November 2025), establishment of a Climate Change Subcommittee (January 2025), and development of circular economy-compliant products based on the 5R definitions.

Failure to appropriately respond to stricter regulations or changes in industry standards concerning environmental impacts such as air pollution, water pollution, industrial waste, and plastic waste could make it difficult to continue production. In the event of an incident resulting in emissions of environmentally hazardous substances exceeding expectations, the Group could incur recovery costs and liability for damages. It addresses this through setting specific reduction targets, regularly monitoring environmental impact data, and developing circular economy-compliant products using bio-based materials.