Nippon Carbon Co.,Ltd.

The Group's overseas sales ratio reached 43.1% (47.9% in the previous fiscal year) in the fiscal year under review, and since the majority of these transactions are denominated in foreign currencies, the Group is directly affected by exchange rate fluctuations. Although hedging is implemented through forward foreign exchange contracts and currency swap transactions, complete elimination of risk is not possible, and rapid fluctuations in exchange rates could have a material impact on operating results and financial condition.

Intensified market competition resulting from changes in the supply-demand balance could cause fluctuations in sales volume and sales prices, potentially having a material impact on operating results and financial condition. Additionally, dramatic changes in product performance driven by the emergence of innovative technologies are cited as a risk that could lead to a decline in the competitiveness of existing products.

While the Group strives to secure a stable supply of raw materials and maintain optimal prices, there is a risk that the Group may become unable to supply products to customers if the supply-demand balance for raw materials becomes tight due to soaring crude oil prices or changes in the production systems of raw material manufacturers. Such a supply disruption could have a material impact on operating results and financial condition.

The Group's production system is concentrated domestically, and against the backdrop of a worsening domestic labor shortage, there are concerns over continued difficulty in recruitment and personnel shortages due to employee turnover over the medium to long term. Delays in human resource development resulting from this could make it difficult to maintain the production system, potentially having a material impact on operating results and financial condition.

The Group conducts business under various legal regulations both in Japan and overseas, and its basic policy is to ensure legal compliance. However, if changes to relevant laws and regulations or tightening of regulations occur, additional human and physical resources may be required to respond, potentially having a material impact on operating results and financial condition.

If a major earthquake or large-scale natural disaster occurs in areas where the Group's production sites and business offices are located, there is a risk of unforeseen circumstances such as damage to buildings, production facilities, and products before shipment, harm to employees, and shortages in the supply of raw materials and electricity. Because the Group's production system is concentrated in Japan, the impact on business continuity in the event of a disaster is particularly significant and could have a material impact on operating results and financial condition.

If the global spread of a new infectious disease has a serious impact on market economic activities, including production and logistics, this could have a material impact on the Group's operating results and financial condition. Given the Group's reliance on the global supply chain and overseas sales, there are concerns that the spread of infectious diseases could deal a blow to both demand and supply.

The Group regards information related to its business activities as an asset and continuously works to build and strengthen its information security systems. However, if an information security incident occurs due to a cyberattack or other unforeseen event exceeding expectations, or if information systems are disrupted or halted due to a natural disaster such as an earthquake, this could affect business activities as well as operating results and financial condition.