Nippon Crucible Co., Ltd.

The Casting Business and Industrial Furnace Business account for 56.7% of net sales, and approximately 90% of the casting market is directed toward the automotive industry. The progress of electrification is expected to significantly change the structure of cast components, including engines, which may affect the Group's business performance. As HEVs, PHEVs, and M-HEVs are expected to remain the mainstream in the domestic market for the time being, the Group places particular emphasis on responding to demand for aluminum components and is advancing the adaptation of its products and services accordingly.

The Steel Business accounts for 9.4% of net sales, but the steel industry continues to see steelworks reorganization and facility reduction against a backdrop of declining demand, which may affect the Group's business performance. In the domestic market, the Group strives to maintain technological strength, market share, and improve profit margins, while in overseas markets it aims to minimize the impact by developing new technologies such as easy-drying trough materials and securing royalty income.

The Engineering Business accounts for 40.8% of net sales, and transactions such as new construction work for industrial furnaces and repair work for incineration facilities often involve large amounts per contract. Since careful inspection through specification confirmation and trial runs, which differ for each contract, is carried out, there is a possibility that the period to which sales are attributed may affect business performance. The Group has adopted a policy of making particularly careful judgments regarding the period of attribution in order to ensure appropriate revenue recognition.

The Group holds a wide variety of inventory items and applies an accounting treatment whereby, when selling prices decline, the book value is written down to fair value and a valuation loss is recorded according to the length of the holding period. Depending on trends in selling prices and the status of inventory turnover, this may affect business performance. The Group strives to properly calculate the amount of write-downs based on established standards through the development of internal control procedures.

Many of the Group's key facilities have been in operation for a long time, and if abnormal shutdowns beyond expectations occur, this may affect business performance. At the Osaka Plant's tunnel kiln, frequent protrusion and detachment of interior lining bricks occurred due to aging deterioration, leading to large-scale repair work starting in March 2025 to stabilize quality and delivery times. The Group is proceeding in parallel with planned facility renewal based on the Medium-Term Management Plan 2027 and fundamental measures through the "Plant Reconstruction Project" launched in April 2023.

Raw materials necessary for the manufacture of Refractories are procured from various countries around the world, including China. If procurement issues arise due to geopolitical risks, or if raw material prices continue to surge or remain elevated, or if the yen continues to depreciate significantly, business performance may decline. The Group is promoting diversification of procurement sources, steady implementation of price revisions based on careful explanations to customers, and agile foreign exchange hedging.

Large amounts of gas and electricity are used in the manufacturing process (firing, etc.) of Shaped Refractories. Following Russia's invasion of Ukraine, crude oil prices rose and the yen depreciated, causing fuel prices to increase at an unprecedented rate in the 183rd term (FY2023, ending March 2023), and prices have remained elevated since the 184th term (FY2024, ending March 2024). Changes in the situation in the Middle East, further surges in crude oil prices, and concerns over the supply of petroleum products may also cause business performance to decline. The Group is working to mitigate the impact by actively pursuing price revisions based on customer understanding.

The Group's production sites (Osaka, Aichi, and Saitama) are located in areas expected to be affected by large-scale earthquakes, including the Nankai Trough earthquake. If natural disasters such as typhoons or torrential rain occur, this may affect business performance in combination with the risk of aging facilities. The Group fundamentally revised its Business Continuity Plan (BCP) in March 2020 and partially revised it again in March 2025, and has established a system for early business recovery through regular education and training.

Damage from cyberattacks is increasing worldwide, and the Company itself experienced a ransomware attack on some devices at one of its business sites in November 2023. Although the impact was limited due to the effectiveness of strengthened security measures, similar attacks in the future could disrupt business operations. The Group continues to strengthen the operation of security tools and utilize advice from external experts, striving to expand its countermeasures.

The escalating international situation surrounding the Middle East raises concerns about direct impacts on business performance, such as surging crude oil prices and instability in the supply of petroleum products, as well as indirect impacts through market trends such as interest rates and foreign exchange rates. This is also linked to the risk of dependence on specific countries, including China, for raw material procurement, and may have a compound effect on the Group's overall business performance. The Group is working to mitigate the impact through diversification of procurement sources and agile foreign exchange hedging.