Sumitomo Osaka Cement Co.,Ltd.

Domestic cement demand is strongly dependent on trends in public and private capital investment, and a sharp decline in these could have a material impact on the Group's business performance. While demand of a certain scale or larger is expected to be secured stably over the medium to long term, in anticipation of near-term demand declines, the Group is working to review its efficient production and logistics systems, reduce costs, and improve sales prices.

If prices of raw materials such as coal used in cement manufacturing rise sharply due to deteriorating international conditions or other factors, this could have a material impact on business performance through increased manufacturing costs. While limestone can be stably supplied from the Company's own mines, for coal the Group is pursuing diversified procurement to reduce geopolitical risk, while also reducing coal usage toward carbon neutrality, and is working to pass on cost increases through sales price adjustments.

The high-performance products business, including the Optoelectronics business and New Materials business, includes many electronic device-related products such as components for semiconductor manufacturing equipment and optical-related products, and rapid technological innovation, evolving technical standards, and changes in customer requirements could have a material impact on business performance. To meet demands in a highly competitive market, the Group is investing management resources and continuously engaging in research, development, and improvement.

If undiscounted future cash flows fall below the book value of an asset group due to changes in the business environment or other factors, impairment processing to reduce the book value of fixed assets to their recoverable amount may become necessary, which could have a material impact on business performance. As declining profitability and falling market value can be major causes of impairment, the Group conducts appropriate management based on forecasts related to future earnings plans and other factors.

If new regulations on CO2 emissions or fossil fuel use are introduced, business activities, particularly in the Cement business, could be constrained and costs could increase, which may have a material impact on business performance. In response, the Group is promoting CO2 emission reduction efforts based on "SOCN2050" Version 2.0, its long-term vision toward carbon neutrality by 2050, which was revised and announced in 2026.

If operations at cement plants with large-scale facilities are disrupted by unforeseen events such as natural disasters, the time and cost required for recovery could have a material impact on business performance. In addition to regular equipment inspections and disaster prevention patrols, the Group minimizes operational risk through the formulation and operation of a BCP (Business Continuity Plan), and has established a system to maintain stable supply through production transfers between cement plants or procurement from business alliance partners in the event of an emergency.

If the Group fails to recruit sufficient excellent human resources or experiences the loss of talent, it may be unable to achieve the business portfolio transformation and business expansion set forth in "SOC Vision2035," which could have a material impact on business performance. The Group is promoting the development of an attractive company through improvements to the working environment and labor conditions, while also working to actively recruit women and expand opportunities for them, and to enhance systems supporting the balance between work and childcare or caregiving.

If efforts toward DX in response to evolving digital technology and increasing uncertainty in the market environment do not progress sufficiently, the competitive gap with other companies could widen, potentially reducing profitability and market competitiveness. In April 2025, the Group established a Digital Promotion Department and formulated and disclosed a DX strategy, and is promoting the development of data infrastructure, business process reform, digital talent development, and organizational reform under a company-wide roadmap and governance structure.

If customer information, personal information, or confidential R&D information is leaked due to cyberattacks or vulnerabilities in information equipment, this could have a material impact on business performance and social credibility. In addition to introducing security services, developing infrastructure, and conducting regular information security assessments, the Group regularly conducts education and awareness activities, including targeted attack email drills for all employees, and has established a response system in which relevant departments cooperate in the event of an incident.

If human rights issues arise directly or indirectly through business activities, this could have a material impact on business performance and the company's social credibility. The Group has formulated the Sumitomo Osaka Cement Group Human Rights Policy, and is working to prevent human rights violations by addressing priority issues identified through a human rights risk assessment map, conducting human rights due diligence, and holding human rights seminars for officers and employees.