FURUKAWA CO.,LTD.

The Group is affected by foreign exchange rate fluctuations in the import of raw materials such as copper concentrate, product exports, and smelting and processing fee income. Although risk mitigation measures such as forward exchange contracts are implemented, significant exchange rate fluctuations may affect business results. As the Group conducts production, procurement, and sales activities widely both domestically and internationally, its exposure to foreign exchange risk is diverse.

Prices of the Group's main products, such as Electrolytic Copper, are linked to international USD-denominated LME prices and fluctuate depending on the international supply-demand balance, speculative trading, and international political and economic conditions. While hedging through futures transactions is used to minimize the impact of LME price fluctuations, significant price fluctuations may have a material impact on business results. Non-ferrous metal market conditions represent a risk fundamental to the Group's earnings structure.

At the end of the current fiscal year, interest-bearing debt recorded on the consolidated balance sheet amounted to ¥57,323 million, accounting for 21.0% of total assets. If liability costs increase due to rising interest rates, this may affect business results. While the Group prepares for sudden interest rate fluctuations by combining various borrowing terms such as fixed rates, the risk of increased funding costs remains in a rising market interest rate environment.

At the end of the current fiscal year, the Group held other securities (listed stocks, etc.) recorded on the consolidated balance sheet at ¥33,161 million and land at ¥52,561 million. A significant decline in stock prices or land prices may result in impairment losses, valuation losses, or losses on sale, affecting business results. Regarding securities, the Board of Directors verifies the appropriateness of continuing to hold each individual security annually, with a policy of proceeding with sales of those deemed to lack significance.

The Group's products are sold not only within Japan but also in major markets such as North America, Europe, and Asia, and significant economic fluctuations may affect business results. Additionally, since some businesses have a high proportion of sales related to domestic public works, large fluctuations in public investment amounts also represent a risk that directly impacts performance. If multiple demand fluctuation factors overlap, the impact may be amplified.

As the Group conducts production, procurement, and sales activities globally, local political instability, sharp economic slowdowns, deteriorating security conditions, trade sanctions, terrorism, and similar events may hinder the smooth execution of business operations. Concerns include decreased sales due to geopolitical risks such as the situations in Ukraine and the Middle East, increased costs due to rising steel material and fuel prices, and adverse effects from changes in U.S. trade policy. These risks are difficult to reasonably foresee, and their impact could be wide-ranging if they materialize.

If production sites or suppliers suffer significant damage due to natural disasters such as earthquakes, large-scale fires, or the global spread of infectious diseases such as novel viruses, stable supply of products and services may become difficult. While measures such as BCP formulation, earthquake response manual preparation, and emergency contact system development are in place, events exceeding expectations may significantly affect business results. If disruptions to the logistics network occur simultaneously, the impact may be further amplified.

The Group implements environmental conservation and pollution prevention measures based on relevant laws and regulations at each business site in Japan and overseas, and in particular takes measures to prevent mining pollution, such as preventing water pollution from mine drainage at closed domestic mines and ensuring the safety of tailings storage facilities. However, if regulations are tightened due to amendments to relevant laws or unforeseen circumstances occur at any business site, response costs may increase, affecting business results. Due to the historical background of the mining business, mining pollution risk is a significant issue unique to the Group.

Under its declared support for the TCFD recommendations, the Group recognizes risks and opportunities associated with climate change as an important management issue and is working to reduce greenhouse gas emissions. The introduction of a carbon tax or damage to business sites and factories due to abnormal weather may affect business results. The Group faces risks that both transition risks (such as policy changes including carbon taxes) and physical risks (damage from abnormal weather) may materialize.

The Group holds confidential information related to research and development, production, and sales, as well as personal information, and if system failures or information leaks occur due to external attacks, unauthorized access, malware infection, or similar incidents, this may affect business results. While measures such as strengthening network security, updating and maintaining systems, and thoroughly enforcing information management rules are implemented, the risk continues to exist as cyberattacks become more sophisticated. If information leakage occurs, in addition to financial losses, it may also damage corporate trust.