KONICA MINOLTA, INC.

Prolonged inflation and monetary tightening in major markets leading to economic downturn, as well as deteriorating conditions in Ukraine and the Middle East, could adversely affect operating results through reduced customer investment and weaker personal consumption. In addition, in light of the strengthening of economic security-related legislation in various countries (such as the Economic Security Promotion Act), the Risk Management Committee regularly monitors the impact on the supply chain and export controls.

Geopolitical risk, fluctuations in U.S. tariff policy, supply constraints on critical minerals and electronic components, and rising energy costs could lead to increased procurement costs, reduced stability of product supply, and deteriorating profitability. The Company is working to reduce these risks by reviewing the role allocation among major production sites, including those in Japan, China, and Malaysia, raising the production ratio in ASEAN and Japan, and diversifying procurement sources and evaluating alternative components.

Restrictions on navigation through the Suez Canal, escalating tensions in the Middle East leading to higher maritime shipping costs and longer lead times, port strikes, and truck transport constraints in Japan due to the so-called "2024 Problem" could result in lost sales opportunities and increased logistics costs. The Company is responding by conducting inventory outlook simulations, securing alternative ports and routes, and strengthening cooperation with major freight forwarders.

If administrator privileges are seized as a result of increasingly sophisticated and advanced cyberattacks, confidential information such as technical information, trade secrets, and personnel information could be leaked, adversely affecting operating results and social credibility. The Company is addressing this through continuous network monitoring, regular penetration testing, cyber insurance coverage, and the operation of global security standards by the Security Management Office (SMO).

Due to the shift to digital devices, the entrenchment of remote work, and the spread of generative AI and cloud computing, office print demand is expected to decline structurally over the medium term. According to IDC, total electrophotographic print volume in 2029 is forecast to decrease by nearly 30% compared to 2024. The Group is responding by expanding scan services, document management, and office solutions, and by promoting one-rate service contracts.

The risk of loss of technology is increasing due to the aging of personnel involved in core technologies as well as production technology and skilled personnel. The Company is addressing this by revising treatment of specialized personnel and reforming its re-employment system, building an in-house knowledge base by leveraging AI chat to capture tacit knowledge, strengthening its production system through robotization, and reinforcing recruitment of highly specialized personnel, including overseas.

The Company has a high overseas sales ratio and is significantly affected by exchange rate fluctuations. A ¥1 depreciation of the yen against the euro has a positive impact of approximately ¥500 million on operating profit, a ¥1 depreciation against the Chinese yuan has a positive impact of approximately ¥1,000 million, and a ¥1 depreciation against the U.S. dollar has a negative impact of approximately ¥100 million. The Company seeks to mitigate this impact through hedging using forward exchange contracts and netting systems.

Changes in laws and regulations in various countries, such as U.S. tariff policy, U.S.-China technology export controls, the EU's GDPR and AI regulations, and healthcare system reforms, could disrupt business activities. In particular, there is a risk that tightened export controls on critical resources such as rare earths could constrain material procurement and production activities. The Company is addressing this by collaborating with legal personnel and specialized institutions in each region, optimizing the allocation of production sites, and diversifying its supply chain.

Amid the rapid evolution of technologies such as generative AI and physical AI, if competitors develop and commercialize similar or alternative technologies ahead of the Company, it could lose its market position for a prolonged period. The Company is addressing this by accelerating the fusion of its four core technologies—materials, optics, imaging, and microfabrication—with AI technology, and by strengthening co-creation activities with universities, research institutions, and startups.

The Company records goodwill and intangible assets in connection with collaborations and acquisitions with other companies, and if future cash flows are expected to decline due to changes in the business environment, impairment losses may be recognized, adversely affecting operating results and financial position. In investment evaluation, the Company sets the companywide weighted average cost of capital as a minimum benchmark, and addresses this risk through regular investment reviews and portfolio reviews at the business unit level.