Taisei Lamick Group Head Quarter & Innovation Co., Ltd.

Raw materials required for the manufacture of packaging film and packaging machinery include items affected by global supply-demand conditions. If a supply chain disruption occurs due to an explosive increase in demand, natural disasters, or similar events, procurement may become difficult or procurement prices may rise sharply. This could adversely affect the Group's business performance and financial position. At present, no specific countermeasures are described in the Annual Securities Report.

If facilities are damaged due to unforeseen events such as earthquakes, wind and flood damage, infectious disease outbreaks, or fires, planned business activities may be suspended or partially restricted. Given the characteristics of a manufacturing business, damage to facilities directly leads to a loss of production capacity, creating a risk of adverse effects on business performance and financial position. No specific countermeasures such as a business continuity plan (BCP) are described in the Annual Securities Report.

The Company conducts business having obtained certifications such as ISO14001 and FSSC22000, but regulatory changes could result in additional costs or temporary restrictions on business activities. The Company also bears product liability, creating a risk of being held liable for damages if problems occur. Although preparations such as product liability insurance coverage have been made, adverse effects on business performance and financial position cannot be completely ruled out.

There are numerous market participants in the packaging film and packaging machinery fields, and the competitive environment is generally intensifying. If environmental changes beyond expectations occur, such as a rapid decline in demand or intensified price competition, this could adversely affect business performance and financial position. The Company is engaged in activities to enhance price competitiveness through technological innovation and optimization of production costs, but responding to sudden changes in the market environment may prove difficult.

The Company is working to develop products, services, and businesses that contribute to solving social issues such as environmental problems and labor shortages. However, if these issues progress at a pace exceeding expectations, the Company may be forced to revise the direction of its initiatives. Delays in response could lead to a decline in competitiveness, creating a risk of adverse effects on business performance and financial position. Keeping pace with the speed of social change has become an important strategic issue.

If the Company is unable to develop or secure personnel with the skills essential for executing its strategy, delays in strategic progress may occur. If securing personnel becomes difficult against the backdrop of the declining birthrate and intensifying competition in the labor market, this could adversely affect business performance and financial position. The Company continues to promote recruitment, training, and reform of its personnel systems, but securing immediately effective solutions is not easy.

Overseas business is positioned as a driver of top-line growth to offset the gradual decline in demand accompanying Japan's population decrease. However, significant changes in local politics, economies, legal systems, and society, or the materialization of risks such as riots, terrorism, or geopolitical risk, could result in partial or complete restriction of business activities in the region concerned. This creates a risk of adverse effects on the Group's business performance and financial position. No specific risk mitigation measures are described in the Annual Securities Report.

The Company conducts some transactions denominated in foreign currencies in connection with overseas business, and sudden and substantial fluctuations in exchange rates could adversely affect business performance and financial position. To mitigate the impact of exchange rate fluctuations on profit, the Company has implemented partial hedging measures, but complete hedging against sudden rate fluctuations may be difficult. As overseas business expands, the significance of this risk may increase going forward.