YAMATO KOGYO CO.,LTD.

The Group operates globally in the U.S., Thailand, Indonesia, and other countries, and terrorism, war, or social unrest could significantly and adversely affect the business performance and financial condition of group companies. There is also a risk that business execution could be disrupted by unforeseen changes in the political, legal, or economic environment in each country. No specific countermeasures are disclosed in the securities report.

In the core Steel Business, fluctuations in product sales prices and the price of scrap, the main raw material, significantly affect business performance. Since both prices are heavily influenced by external factors, including domestic and overseas economic conditions, there is a risk that a narrowing price spread could directly squeeze profitability. No specific hedging measures are disclosed in the securities report.

Since the consolidated financial statements are prepared by translating the results of overseas subsidiaries and affiliates into yen, exchange rate fluctuations affect the financial condition. The proportion of foreign currency in cash and deposits held is high, and yen appreciation adversely affects business performance. Changes in the foreign currency translation adjustment account significantly affect comprehensive income and net assets, but no hedging is conducted under the policy of continuing overseas business operations.

As an electric arc furnace steelmaker, the Company uses large amounts of electricity, and a significant increase in electricity unit prices or restrictions on electricity usage could adversely affect business performance. A similar risk exists at each of its globally deployed sites. No specific countermeasures are disclosed in the securities report.

Climate change may lead to rising costs and supply instability for raw materials, electricity and other energy, and water. There is also a risk that the introduction of policies such as carbon pricing could cause fuel prices to surge, resulting in additional cost burdens. Detailed countermeasures are disclosed on the sustainability page of the Company's website.

To improve operational efficiency and strengthen competitiveness, the Company utilizes various information systems and routinely handles confidential information, personal information, and customer information. If cyberattack risks materialize, business suspension, customer damages, reputational damage, and legal liability could occur, potentially adversely affecting business activities, operating results, financial condition, and social credibility. As countermeasures, the Company is implementing security software, multi-layered network defenses, vulnerability assessments by external organizations, and efforts to raise security awareness across the entire supply chain; however, it recognizes that complete elimination of risk is difficult given the increasing sophistication of technology.