NICHIA STEEL WORKS, LTD.

Changes in industry standards or the adoption of new methods and materials could significantly alter the sales environment, potentially disrupting the Group's production and sales activities. Given the nature of the business, which handles steel materials and galvanized products, changes in industry standards could directly affect product lineups and manufacturing processes. No specific countermeasures have been disclosed at this time.

Prices of raw materials such as iron ore, scrap, and zinc are linked to international market conditions, and fluctuations in these markets could directly affect the Group's manufacturing costs and business performance. Raw material costs are a major cost factor in the steel-related business, and price increases could lead to deteriorating profitability. No specific hedging measures or other countermeasures have been disclosed at this time.

If the market value of fixed assets declines significantly or business profitability deteriorates, the application of impairment accounting could result in impairment losses, potentially having a material impact on business performance and financial condition. As a manufacturing group with a large scale of capital investment, impairment risk is a critical issue directly linked to financial soundness. No specific preventive measures have been disclosed at this time.

The Group holds and manages investment securities, and stock and bond market trends could affect business performance and financial condition. As a countermeasure, the Group examines the trading and management status of held stocks and bonds on an individual issue basis, and comprehensively considers factors such as the business performance, financial condition, unrealized gains/losses, and investment returns of investees to determine the appropriateness of continued holding or new holdings.

The revision of the Labor Standards Act in April 2024 introduced an overtime cap (960 hours per year) in the logistics and construction industries, and demand slowdown in the construction and civil engineering sectors due to labor shortages may continue. Some of the Group's products depend on demand from the construction and civil engineering sectors, and a slowdown in these sectors could lead to a decline in sales volume. No specific countermeasures have been disclosed at this time.

Tariff and trade policies under the Trump administration in the United States could affect demand trends in the automotive sector as well as economic conditions in Japan and globally, which could adversely affect the Group's business performance. Steel and galvanized products are closely linked to demand from the automotive industry, and an escalation of trade friction could indirectly worsen the sales environment. No specific countermeasures have been disclosed at this time.

Heightened geopolitical risks, including a deterioration of the situation in the Middle East, could lead to demand slowdown, supply chain disruptions, surging fuel prices, and procurement difficulties, potentially affecting the Group's production and sales activities. In particular, rising procurement costs for fuel and raw materials directly impact manufacturing costs. The company states that it will closely monitor future developments and take timely and appropriate countermeasures.

Natural disasters such as earthquakes, tsunamis, and typhoons could disrupt production and sales activities. As countermeasures, the company has distributed its domestic manufacturing bases between the Kanto and Kansai regions, establishing a mutual backup system, and has relocated its core servers from the head office in Amagasaki, Hyogo Prefecture, to a data center in Sanda City, while also storing data replicas at a data center in Chiba Prefecture to reduce system risk. In addition, the company has enhanced disaster prevention equipment and facilities, prepared and updated disaster response manuals, and conducts regular initial response drills.