Nippon Seisen Co., LTD.

The introduction of carbon taxes is expected to increase procurement and operating costs, while demand for internal combustion engine vehicle parts materials is expected to decline. The Group must also respond to environmental regulations in various regions around the world, creating a risk of increased manufacturing costs. In response, the Group has established a Sustainability Committee chaired by the Representative Director and President, and has set CO₂ emission reduction targets in its medium-term management plan (NSG26).

In the event of a massive Nankai Trough earthquake, a direct-hit earthquake, or a large-scale disaster or terrorist attack at overseas facilities, there is a risk of operational suspension or impairment of asset value due to damage to production equipment or disruption of supply chain functions. The Group is promoting the review of its BCP, thorough management and operation of safety stock, seismic reinforcement and flood countermeasures, upgrading of power reception and distribution equipment, and fail-safe design of equipment, and has established a system to report to the Management Committee twice a year.

The outbreak and spread of new infectious diseases could cause production line shutdowns at domestic and overseas plants and disrupt the supply chain, making it difficult to supply products to customers. Compensation associated with plant closures and deteriorating operating rates could also affect profit/loss and cash flow. Learning from the COVID-19 pandemic, the Group has reviewed its BCP and strengthened its safety confirmation system and manuals.

The Group holds trade secrets such as manufacturing know-how, customer information, and design drawings, as well as personal data. If information leakage occurs due to computer viruses or unauthorized access, there is a risk of financial impact including loss of customer trust, reduced product competitiveness, and liability for damages. The Group strives to prevent the spread of damage through thorough enforcement of security policies, prevention using the latest security technology, and daily security log checks.

The Group has a structure dependent on specific advanced technology industries such as automobiles, energy, IT, semiconductors, and chemical products, creating a risk that the order environment could fluctuate significantly due to changes in customers' supply-demand conditions, investment plans, and distribution inventory. The Group is working to suppress fixed costs through a flexible production system based on multi-skilled workers, and to diversify order fluctuation risk by enhancing its product portfolio for a variety of industries and sectors.

If uncertainty in trade policy, including U.S. reciprocal tariffs, geopolitical risks such as conflicts, China risk, and semiconductor-related export bans and sanctions become apparent, this could lead to decreased sales of the Ultra-Precision Gas Filter (NASclean®) and other products. The country risk of global customers indirectly affects the Group's order environment, and the Group is responding by diversifying its product portfolio.

The mainstay Stainless Steel Wire division is affected by rare metal market conditions such as nickel and chromium, and procurement costs increase when international market prices surge due to country risk in producing countries. The impact is considered limited due to linked changes in sales prices and a surcharge system, but the Group also recognizes the risk that customers may switch to cheaper alternatives in the event of extreme surges in nickel prices.

There is a risk that companies in other industries or technological innovation could lead to the development of materials or structures that replace the Group's Stainless Steel Wire and metal fiber products. The Group strives to capture changes in customer and market needs through market research, technical exchange meetings, and exhibitions, and to maintain competitiveness through timely introduction of new products and quality improvement activities.

If a defect occurs in the Group's products, which are used as materials for semiconductor manufacturing equipment, medical devices, automobiles, and related applications, there is a risk of harm to users' life and health, potentially leading to claims for damages. In addition to taking out liability insurance, the Group is working to prevent the shipment of nonconforming products through thorough quality education, investment in systemization of inspection processes, and introduction of an automatic measurement data acquisition system to prevent inspection data fraud.

There are processes involving the handling of heavy objects, hazardous equipment such as wire drawing machines, and specified chemical substances, creating a risk of occupational accidents that threaten employee safety and health. The Group continues to invest in fail-safe equipment design and supports subsidies for comprehensive medical checkups and health maintenance and improvement activities, and has been certified as an "Excellent Enterprise of Health and Productivity Management" for seven consecutive years and as "White 500" for two consecutive years.