ITO YOGYO CO., LTD.

The Company has a high dependence on public works, and given ongoing structural reforms and changes in the economic environment, a significant increase in public investment cannot be expected. If the market continues to contract, this could adversely affect the Company's business performance. As a countermeasure, the Company is working to actively expand into private-sector business and to develop high value-added products and goods.

The Company handles imported goods denominated in foreign currencies from overseas manufacturers, and thus bears foreign exchange risk on accounts payable related to purchasing. Sharp fluctuations in exchange rates could lead to increased procurement costs, which may adversely affect the Company's business performance. As a countermeasure, the Company strives to manage exchange rates, has established a dedicated department, and thoroughly enforces internal rules.

Domestic cement prices, a raw material for the Company's concrete products, are affected by fluctuations in crude oil prices. Under harsh market conditions, cost increases may not be fully passed on to selling prices, which could adversely affect the Company's business performance. As a countermeasure, the Company strives to establish a dedicated department and thoroughly enforce internal rules.