Shinko Wire Company, Ltd.

As the Group's main customers are in the civil engineering and construction, construction machinery, automobile, and electrical equipment industries, trends in public and private capital investment and demand declines due to economic fluctuations directly affect order volumes and sales volumes. External environmental factors such as heightened geopolitical risk, disruptions to international supply chains, and fluctuations in raw material and energy prices also affect demand trends. The Group is working to reduce excessive dependence on specific industries and diversify applications and markets, but if this does not progress as planned, the risk may materialize.

In the automobile industry, technological innovations such as electrification are progressing, changing the composition of parts demand and product applications. If the Group is unable to respond appropriately to such changes in market structure, it may adversely affect business performance. The Group strives to diversify applications and markets, but delayed responses could lead to a loss of demand for existing products.

In Japan, where the Group's main facilities are concentrated, business operations may become temporarily difficult due to natural disasters such as earthquakes, tsunamis, and typhoons, or the spread of infectious diseases. If a significant decline in product demand occurs due to reduced activity levels among domestic and overseas customers, this would adversely affect the entire chain of business activities from production to sales, as well as business results and financial condition. As countermeasures, the Group has formulated a BCP assuming a large-scale earthquake, standardizing and expediting responses by phase, while also taking out third-party insurance and establishing behavioral guidelines for infection prevention.

Due to excess demand, supplier withdrawals from business, natural disasters, infectious diseases, heightened geopolitical risk, and instability in the international situation including the Middle East region, situations may arise in which suppliers are unable to supply raw materials and parts of appropriate quality and quantity. There is a risk that procurement delays, supply shortages, and logistics disruptions could adversely affect overall production and sales activities. As countermeasures, the Group is working to establish a procurement system from multiple suppliers, while also conducting interviews with suppliers regarding the availability of alternative production sites.

Fluctuations in crude oil and energy prices and progressing inflation, driven by heightened geopolitical risk and instability in the international situation, may lead to rising market prices for raw materials, parts, and services. These factors contribute to increased manufacturing costs, adversely affecting business results and financial condition. The Group is addressing this by closely monitoring market price trends while appropriately passing on cost increases to sales prices.

Due to the declining working-age population in Japan and accelerating labor mobility, securing and developing labor and capable personnel may not proceed as planned. If appropriate sales and production systems are compromised, this would affect the entire chain of business activities from production to sales, as well as business results and financial condition. The Group is working to strengthen various initiatives, improve capabilities through human resource development, and enhance labor productivity through labor-saving measures.

The Group may face lawsuits or complaints due to issues related to product liability law or intellectual property rights, or may be subject to sanctions such as fines for violations of laws and regulations. If such events occur, they may affect business results, financial condition, or social credibility. As a countermeasure, the Group regularly conducts compliance training and e-learning education for all employees, striving to enhance its compliance promotion system.