ISHIZUKA GLASS CO.,LTD.

Due to changing consumer needs and competition from containers made of other materials, shipment volumes across the glass bottle industry as a whole are on a gradual downward trend, with industry shipment weight in 2025 falling to 94.5% of the previous year. Should demand changes occur that significantly exceed expectations going forward, this could have a material impact on the Group's business results. Since the Glass Bottle Business is the Group's core business, structural demand contraction carries the risk of directly impairing the Group's revenue base.

Energy costs such as LNG and electricity used in manufacturing processes, as well as key raw materials such as PET Bottle Preforms, are linked to crude oil price and foreign exchange rate fluctuations. Although the Group hedges risk through foreign exchange forward contracts and other means, if price fluctuations exceed expectations, this could affect the Group's business results. If cost increases cannot be passed on to selling prices, there is a risk that profitability could decline significantly.

The Group conducts 100% inspection under strict quality control, and has taken out product liability insurance in case a claim leading to a compensation issue should arise. However, there is no guarantee that this insurance would fully cover the amount of compensation, and such an issue could also develop into a credibility problem. If a quality issue becomes apparent, there is a risk that, in addition to financial losses, damage to the brand could adversely affect business relationships.

The Group conducts credit sales transactions with numerous business partners, and works to avoid credit risk by collecting credit information and periodically reviewing credit limits. However, in the event of an unexpected situation such as a business partner's bankruptcy—for example, if the business environment deteriorates significantly—problems in collecting receivables could arise. Failure to collect accounts receivable would directly and adversely affect the Group's business results and financial position.

If a disaster such as a large-scale earthquake occurs at major production sites including the Iwakura, Tokyo, Himeji, and Fukusaki plants and causes major damage to production facilities, the resulting suspension of operations could have a material impact on the Group's business results. In addition, if a supplier is affected by a disaster and procurement becomes impossible, this would also significantly impact business results. Although the Group conducts regular disaster prevention inspections and facility maintenance, there are limits to how fully it can prepare for large-scale disasters.

The Group manufactures and sells beverage containers mainly in Japan, and weather during the peak demand season has a direct impact on business results. In particular, if adverse weather such as a cool summer or a prolonged rainy season occurs, demand for soft drinks and other beverages may decline, which could affect the Group's business results. Weather is an external factor and an uncontrollable risk that causes fluctuations in business results each fiscal period.

The Group has established a defined benefit corporate pension plan and a lump-sum retirement benefit plan, and periodically reviews its pension asset investment policy based on projections of future retirement benefit obligations. Changes in the assumptions used in calculations, such as the discount rate, or a decline in the fair value of pension assets, could affect the Group's business results and financial position. In an environment of changing interest rates or a declining stock market, there is a risk that retirement benefit expenses could increase and unrecognized obligations could expand.

The Group holds shares of business partners over the long term for the purpose of maintaining and expanding business relationships, and the Board of Directors verifies the rationale for holding these shares every year. However, if market value declines significantly due to deteriorating conditions in the securities market or poor performance of investee companies, the Group may need to record impairment losses, which could affect its business results and financial position. Depending on the level of cross-shareholdings held, a deterioration in market conditions could result in temporary losses that significantly reduce business results.

Amid a global tightening of regulations aimed at reducing greenhouse gas emissions, the Group has set key targets under ISHIZUKA GROUP 2030 to reduce Scope 1+2 emissions by 50% and Scope 3 emissions by 25% by fiscal 2030 (both compared to fiscal 2020). Under the FY2027 (ending March 2027) Medium-Term Management Plan, the Group is working toward a 30% reduction in Scope 1+2 emissions (compared to fiscal 2020), but if the pace of regulatory tightening exceeds expectations, there is a risk of additional capital investment and increased operating costs. If the Group's response is delayed, it may become unable to meet customers' requirements for continuing business transactions.