TYK CORPORATION

The Group has a high share of refractory products related to the steel industry, and is therefore significantly affected by trends in the steel industry. Economic conditions in demand regions, competitive conditions, and trends in tariffs, trade, taxation, and other legal regulations may also affect business results. Due to the high degree of dependence on specific industries and regions, a downturn in steel demand could directly lead to a deterioration in business performance.

The Group imports refractory raw materials from various regions around the world, but some of these are dependent on specific regions or suppliers. Raw material prices have recently been highly volatile, and although the Group strives to reduce risk by diversifying its suppliers, price fluctuations may affect business results. Since dependence on specific regions and suppliers remains, there are also concerns about the impact of geopolitical risks or supply disruptions should they occur.

Transactions denominated in foreign currencies are conducted mainly in US dollars and euros, and the Group seeks to limit exchange rate fluctuation risk by offsetting raw material imports against product exports. However, it is difficult to completely eliminate fluctuation risk, and exchange rate movements may affect business results. In particular, a stronger yen could worsen export profitability, while a weaker yen could raise the cost of imported raw materials.

The Group procures part of its working capital through borrowings from banks and other financial institutions. Although the outstanding balance of borrowings is not considered high relative to the scale of operations, a sharp rise in interest rates could increase financial costs and affect business results. Given recent changes in monetary policy, it is necessary to closely monitor the impact of a rising interest rate environment.

The value of investment securities held by the Group may fluctuate due to poor performance of investee companies or deterioration in securities market conditions. If the value declines, it will affect business results and financial condition through the recording of valuation losses and other effects. Depending on the scale and composition of the securities held, a deterioration in market conditions could have a temporary impact on profit and loss.

The Group has production facilities both in Japan and overseas, and if a large-scale disaster occurs in these regions, it could affect production capacity and worsen business results. This applies to natural disasters such as earthquakes, floods, and fires, as well as man-made disasters. While diversification across multiple sites provides some risk mitigation, damage at a major site could hinder the Group's ability to fulfill its supply responsibilities.