THE YOKOHAMA RUBBER CO., LTD.

There is a risk that manufacturing costs for major raw materials, including petrochemical products, will rise due to a significant increase in natural rubber prices and a surge in international crude oil prices. Although various countermeasures are being implemented, if the cost increase exceeds the range that can be absorbed, it may affect business performance and financial condition.

With the expansion of global operations, commercial transactions and investment/financing activities denominated in US dollars and other foreign currencies have increased, heightening the impact of foreign exchange fluctuations on business performance and financial condition. Although hedging measures such as forward exchange contracts are employed, it is explicitly stated that complete avoidance of this risk is difficult.

The Company acquired Goodyear's OTR (tires for construction and mining vehicles) business effective February 4, 2025, and there is a risk that goodwill impairment losses may occur if the performance of the acquired business falls short of expectations at the time of acquisition or due to changes in the business environment. Companies and businesses acquired in the past also carry similar risks, raising concerns about the impact on business performance and financial condition.

Due to the situation in Ukraine, the operational status of the passenger car tire manufacturing company in Russia remains uncertain, and heightened geopolitical risks, including the situation in the Middle East, may cause disruptions to corporate activities and logistics in the countries and regions where the Group operates. Changes in the situation in various countries and regions may affect the business performance and financial condition of the Group.

As of December 31, 2025, the ratio of interest-bearing debt to total assets was approximately 26.8%, and depending on future interest rate trends, an increase in financial expenses may affect business performance. Some loan agreements are subject to financial covenants, and there is a risk that violation of these covenants could restrict fundraising. The Company is working to improve its financial structure through the use of group financing.

It is explicitly stated that it is difficult to completely eliminate the possibility of system failures caused by cyberattacks or disasters associated with global business operations. If critical business operations are suspended or information is leaked, it may affect overall business activities, business performance, and financial condition, and while countermeasures are being advanced, complete prevention remains difficult.

Although quality control is positioned as the top management priority and a thorough system is in place, it is recognized that it is difficult to completely eliminate product defects or deficiencies. If a large-scale recall or substantial damages resulting from defects occur, it may have a material impact on business performance and financial condition.

There are both "transition risks," such as increased procurement and manufacturing costs associated with the introduction of carbon taxes and greenhouse gas emission reduction targets, and "physical risks," such as factory operation suspensions due to floods or droughts. Although measures to reduce greenhouse gas emissions are being implemented, these risks may affect business activities, business performance, and financial condition, with details disclosed in sustainability disclosures such as TCFD.

The Company is proceeding with the construction of new production facilities in North America and China, as well as capital investment centered on Japan and Asia; however, if unforeseen circumstances arise due to local legal regulations or customs, there is a risk that the expected results may not be achieved. Failure of such investments may directly affect business performance and financial condition.

The Group is subject to a wide range of domestic and international laws and regulations, including those related to investment, trade, antitrust, personal information protection, and environmental protection, and the enactment of new regulations or unexpected changes in laws may result in restrictions on business activities or increased costs. In addition, the Group's domestic and international business activities may become subject to litigation or investigations by authorities in various countries, and if significant litigation or investigations occur, they may affect business performance and financial condition.