RYOBI LIMITED

With progress in automotive electrification toward achieving a decarbonized society, demand for the Group's products—mainly power train and drive train components such as engines and transmissions—is changing, and this is affecting the Group's business structure. Although the Group is actively working to convert electrification components and body/chassis components to die-cast products, if unexpected changes occur in the structure of the automotive market, this could lead to a decrease in orders and may affect the Group's financial position and business results.

The Group's sales have a high proportion attributable to automotive applications within the Die Casting business, and since production is order-based, sales are subject to significant fluctuation depending on the production and sales conditions of the automotive industry. If an economic downturn or contraction in demand occurs in global markets, including Japan, North America, Europe, and Asia, this could have a material impact on the Group's financial position and business results.

There is a risk that political and economic instability, sudden changes in laws, regulations, and tax systems, large-scale labor disputes, or social unrest caused by terrorism or war may occur in the countries and regions where the Group operates. If such events materialize, it may become difficult to continue local business operations, which could affect the Group's financial position and business results.

The Group has obtained ISO9001 and IATF16949 certifications and conducts production activities under a strict quality control system; however, if a claim leading to large-scale compensation occurs, this could result in substantial cost burdens and a decline in social credibility. Given the nature of automotive parts, where safety implications are significant, quality defects could have a severe impact on the Group's financial position and business results.

The Group strives to reduce risk through the establishment of a crisis management system and business continuity plan (BCP); however, if a natural disaster or accident of a scale exceeding expectations occurs, this could cause delays or suspension of production and delivery activities at the Group and its business partners. Complete avoidance of such risk is difficult, and if such an event occurs, it could affect the Group's financial position and business results.

The Group has implemented risk diversification and early recovery measures, such as distributed server placement utilizing data centers; however, if a critical system goes down due to a cyberattack, malware infection, large-scale network failure, or an unforeseen disaster, this could lead to a suspension of business activities, which could affect the Group's financial position and business results. This risk is also linked to the risk of information leakage and could lead to a decline in social credibility.

Fixed assets held by the Group, such as factory buildings and production equipment, carry the risk that if profitability declines due to significant changes in the management environment or business conditions, recovery of the invested amount may become difficult, resulting in impairment losses. As structural changes in the automotive market accelerate, the risk of obsolescence of existing equipment increases, which could affect the Group's financial position and business results.

The Group conducts business globally, and fluctuations in exchange rates may directly affect its financial position and business results. Since the financial statements of overseas subsidiaries are prepared in local currencies, there is also a risk that fluctuations in exchange rates at the time of translation into the consolidated financial statements could cause variation in consolidated performance figures.

The Group is subject to various legal regulations, including competition law, labor law, and environmental regulations, in each country where it operates, and strives for compliance through the establishment of a compliance system. However, if unexpected legal violations occur, or if substantial costs are incurred for regulatory compliance and adaptation, this could affect the Group's financial position and business results.

There is a risk that the Group may not be able to continuously secure high-quality labor due to intensifying competition for talent amid changes in employment conditions, a shortage of specialized personnel to address technological sophistication, and rising turnover rates. In addition, if the succession of skilled expertise does not proceed smoothly, this could lead to a decline in product quality and deterioration in production efficiency, and if it impedes the maintenance and growth of the business, this could affect the Group's financial position and business results.