GEOSTR Corporation

The majority of the Company's core products, Segment Products (Steel and Composite Segments) and RC Civil Engineering Products, are destined for public works projects, and business performance is affected by trends in public works investment determined by the policies of the Japanese government and local municipalities. If such investment contracts, sales and profits may be directly impacted. The securities report does not describe any specific countermeasures.

Prices of raw materials such as cement, aggregate, steel, and heavy oil fluctuate in line with market trends, and if manufacturing costs rise, profit and loss may deteriorate. As a countermeasure, the Company is pursuing fundamental procurement reforms, including consideration of centralized purchasing of raw materials used nationwide, and is working to reduce costs.

Against the backdrop of a long-term decline in the working population, labor shortages, particularly in the civil engineering field, continue and may affect business operations and performance. As a countermeasure, the Company accepts foreign workers and has prepared multilingual versions of the "Safety Guidebook," "Safety Posters," and safety training DVDs, working to create an environment in which foreign workers can work safely and smoothly.

While public works investment continues to trend firmly, deterioration in the creditworthiness of business partners may lead to bad debt losses on receivables, affecting profit and loss. As a countermeasure, the Company reviews credit limits annually with reference to ratings from credit research firms and conducts individual deliberation for projects exceeding the credit limit.

If production facilities are damaged by a large-scale earthquake or other natural disaster, business performance may be affected through interruption of production activities, among other impacts. The Company has implemented large-scale earthquake countermeasures at each plant, including the preparation of earthquake response manuals, clear marking of evacuation routes and evacuation sites, stockpiling of emergency supplies, and conducting annual evacuation drills.

Heightened geopolitical risk, including the situation in the Middle East, may cause price increases that affect profit and loss. In addition, a halt in the supply of petrochemical products could affect production activities. The securities report does not describe any specific countermeasures.