MITANI SEKISAN Co., Ltd.

The core Pile segment is heavily dependent on private-sector demand, and if demand declines more than expected, it could have a material impact on business performance. The Company monitors order forecasts and project volumes monthly at management executive meetings and branch manager meetings, and considers countermeasures as appropriate to address demand fluctuations.

There is a risk that products and services will be exposed to fierce price competition due to the intensification of price competition in the markets in which the Company operates and the entry of new competitors. In particular, price competition at the stage of concluding pile construction contracts directly leads to the occurrence of unprofitable projects, raising concerns about the impact on business performance.

In pile construction work, if low-profit orders resulting from price competition, or construction delays caused by design changes, schedule revisions, or manufacturing process constraints occur, the estimated total cost may exceed total revenue, requiring the recognition of a provision for construction losses. The Company has established a follow-up system integrating the construction division and the construction engineering division to strengthen its response to risks of schedule delays and additional cost occurrence.

For pile construction work, revenue is recognized over a certain period based on progress measured using the input method, and it may become necessary to revise construction cost estimates due to design changes, schedule revisions, or manufacturing process constraints. Since negotiations to revise revenue estimates related to additional or modified construction work may take a certain amount of time, this could impact business performance. The Company addresses this through continuous cost management for each construction project and by enhancing its daily report management and construction quality control systems.

Raw materials such as cement and steel are procured from multiple suppliers, but some specialty raw materials depend on a limited number of suppliers, raising concerns about a halt in production activities if procurement is disrupted by disasters, accidents, or other events. The Company strives to secure stably supplied, quality-assured raw materials and to develop multiple procurement sources, but dependency risk for specialty raw materials remains.

In the Secondary Concrete Products Business, cement and steel are used as major raw materials, and there is a risk that rising procurement prices due to market price fluctuations will push up manufacturing costs. While the Company is pursuing company-wide cost reductions and requesting appropriate price revisions from customers, depending on price trends, an impact on business performance may not be avoidable.

The Company holds design and construction information, customer information, management, technical, and intellectual property information, and personal information. If information is leaked or lost due to external cyberattacks or employee negligence, this could result in loss of credibility, damages, and restoration costs, impacting business performance. The Company addresses this through strengthened security software, entry and exit management, log monitoring, security education, and the establishment of a backup system.

The Company operates its business under licenses and approvals such as construction business licenses and industrial waste disposal permits, and if such licenses or approvals were revoked due to violations of laws and regulations, this could cause serious disruption to business operations. The Company maintains its legal compliance system through internal audits, the establishment of an internal reporting system, and thorough dissemination of compliance awareness.

As the Company operates production and sales sites nationwide, in the event of natural disasters such as earthquakes, tsunamis, or storm and flood damage, or a global outbreak of infectious disease, direct damage to owned assets and employees could occur, and changes in the business environment—such as shifts in order trends or surges in construction material prices—could impact business performance. The Company has implemented business continuity measures such as raising regional risk awareness using hazard maps, infection prevention measures, and the promotion of telework.

The Company promotes the development of high-quality, low-cost, and innovative products and construction methods, and has filed numerous patent applications; however, even after investigating publicly known technologies, infringement of rights held by other companies cannot be completely ruled out. If infringement occurs, the Company may face product sales suspensions or claims for damages, raising concerns about the impact on business performance.