Mitsubishi Steel Mfg. Co., Ltd.

Risk that orders, sales volume, and operating rates fluctuate due to business cycle changes and capital expenditure trends among major demand sources such as automobiles and construction machinery. There is also a possibility of medium-to-long-term contraction in the domestic market, which could affect business performance and cash flow through declining sales, lower utilization rates, and increased inventory. In response, the company promotes continuous monitoring of market trends and optimization of the business portfolio using ROIC.

Risk that competitive advantage declines in the domestic steel products business, automotive springs business, etc., due to intensifying price competition with domestic and overseas competitors, delayed response to technological innovation, and changes in customer needs. This can lead to falling sales prices, loss of market share, and deteriorating profit margins, and delays in expanding sales in growth investment areas may also affect investment recovery plans. The company responds through differentiation leveraging advanced know-how, quality response capabilities, and its customer base, along with focused allocation of resources to R&D, capital expenditure, and human capital investment.

Risk that prices of steel raw materials, auxiliary materials, electricity, fuel, etc., fluctuate significantly in the short term due to international market conditions, geopolitical factors, exchange rate trends, and other factors. If a rapid price increase cannot be passed on to sales prices in a timely and sufficient manner, it results in lower profit margins, deteriorating earnings, and impacts on production plans. The company seeks to mitigate the impact through the establishment of sales price-linked formulas, securing multiple suppliers, cost reduction activities, and price revision negotiations with customers.

Risk that changes in political and economic conditions or geopolitical tensions suddenly emerge at overseas locations in North America, China, India, Southeast Asia, and other regions. This affects the financial position and business performance through disruptions to production and logistics, supply chain disruptions, additional costs, declines in asset value, and translation gains/losses. The company addresses this through foreign exchange risk mitigation measures such as hedge contracts and capital increases via intercompany loans, as well as diversification of supply chains and securing alternative procurement sources.

Risk that business performance is affected by increased procurement and manufacturing costs due to stricter regulations such as carbon taxes and progress in decarbonization, loss of market share due to delayed response to environment-related demand, and damage to facilities and supply chains from increasingly severe extreme weather. The company has set a 2050 carbon neutrality target and is working to reduce GHG emissions, while also promoting the development and sale of environment-related products to respond to changing demand structures. It also continues to improve environmental management through the operation of ISO14001 and the introduction of energy-saving equipment.

Risk of unexpected defects occurring in the design, manufacturing, and inspection processes for products where safety and reliability are important, such as those for automobiles and construction machinery. If a serious quality defect becomes apparent, it could have a significant impact on the financial position, business performance, and social credibility through product recalls, compensation, litigation, and loss of trust. In addition to strengthening quality control systems and thorough process management, the company is improving the effectiveness of its corrective systems by conducting quality inspections at each site to prevent quality fraud.

Risk that equipment accidents such as fires and explosions or serious occupational accidents suddenly occur at business sites handling high-temperature, high-pressure operating equipment or high-heat products. This affects business performance and social credibility through personal injury, production stoppage, recovery costs, delivery delays, and administrative penalties. The company strives to eliminate equipment accidents and occupational accidents through continuous safety patrols, safety officer meetings, and cross-departmental discussions on causes and countermeasures by safety committees.

Risk that securing and developing the necessary personnel in manufacturing, technology development, digital, and other fields does not proceed as planned due to the declining working-age population in Japan and intensifying competition in the labor market. This affects competitiveness and the execution of medium-to-long-term growth strategies through delayed transfer of technology and skills, decreased productivity, and delays in new business development and DX promotion. The company is working to strengthen its human resource base through enhanced recruitment, education and training, skills transfer, improved engagement, and promotion of diverse talent.

Risk that system outages or leaks of confidential information occur due to increasingly sophisticated cyberattacks, unauthorized access, system failures, human error, and other factors. This affects business performance and social credibility through disruptions to production, shipping, and accounting processes, leakage of confidential information, recovery costs, and loss of trust from business partners. The company seeks to prevent and minimize damage through strengthened information security measures, access control, backups, incident response system development, and cybersecurity insurance.

Risk that legal violations become apparent due to amendments, tightening, or reinterpretation of domestic and overseas laws and regulations such as the Companies Act, Antimonopoly Act, environmental laws, and import/export-related laws, or due to insufficient response to such changes. This affects the financial position, business performance, and social credibility through administrative penalties, fines, damages, litigation response, and loss of trust. The company strives to ensure thorough compliance through the consolidation of legal functions within the Risk Management Division, strengthening of legal compliance systems, and operation and monitoring of the internal whistleblowing system.