Bunka Shutter Co., Ltd.

COVID-19 has already been reclassified as a Category V infectious disease, but the emergence of new mutant strains or new pandemics remains unpredictable in terms of timing, location, and frequency. Such outbreaks could damage the global and Japanese economies, which may adversely affect the business results and financial condition of the Group. Similar risks also exist in the Group's overseas business locations (Southeast Asia and Oceania).

In the event of a major earthquake directly beneath the Tokyo metropolitan area, a Tokai or Nankai Trough earthquake, or other unforeseen natural disasters, the Group's production, sales, and service sites nationwide could experience reduced product supply capacity or delays in Emergency Repair Service response. Although the Group is advancing measures such as diversifying its supply structure and consolidating sites, complete protection cannot be guaranteed, and if any site is damaged, restoration and alternative costs could become substantial, adversely affecting the Group's business results and financial condition.

The Shutter-Related Products and Building Materials-Related Products businesses, which account for the majority of net sales, use steel materials (steel sheets, stainless steel, etc.) as their main raw materials, and rises in the prices of steel raw materials and raw coking coal directly translate into higher steel material costs. In addition, the global shortage of semiconductors required for electric products and electrical components, combined with difficulties in procuring materials from overseas due to global political changes, may adversely affect the Group's business results and financial condition.

Disaster-prevention products such as fire shutters and fire doors must reliably deliver the performance needed to form fire compartments and secure evacuation routes in the event of a fire; however, due to the lack of periodic inspections at medical facilities and other locations, as well as differences among local governments in designating inspection targets, maintenance and inspection of all installed products has not fully progressed. In addition, heavy-duty shutters and similar products cannot be completely protected against the risk of serious accidents arising from aging deterioration, deterioration of the building structure, or lack of maintenance inspections. Should an accident occur, it could damage the Group's brand image and adversely affect its business results and financial condition.

The Group uses private-sector capital investment, new housing starts, and non-residential construction floor area as leading indicators. While construction demand is expected to be driven mainly by the non-residential sector, factors such as soaring material prices, chronic labor shortages, and the spread of work-style reforms in the construction industry could accelerate the suspension, delay, or extension of construction periods. Should such demand suppression progress, it may adversely affect the Group's business results and financial condition.

The Group may pursue business expansion through corporate acquisitions and business alliances with other companies in order to improve management efficiency and strengthen competitiveness. If, following an acquisition or alliance, changes in the market environment or other factors prevent the initially expected results from being achieved, this may adversely affect the Group's business results and financial condition.

The Shutter-Related Products and Building Materials-Related Products businesses tend to have completions and deliveries concentrated at the fiscal year-end, and if adequate and sufficient personnel cannot be secured during the busy season, this may adversely affect the Group's business results and financial condition. Amid a chronic labor shortage across the industry, this seasonal fluctuation risk has become a structural challenge.

The Group strives to ensure thorough compliance among all officers and employees; however, should any act in violation of laws and regulations occur, this could result in disciplinary action by regulatory authorities, litigation, or loss of social credibility, adversely affecting the Group's business results and financial condition.

The Group conducts business in Southeast Asian countries, mainly Vietnam, as well as in Australia and New Zealand. Sudden changes in local political or economic conditions, heightened military tensions in the East China Sea, terrorism, or infectious virus outbreaks could make it difficult to continue operations. Should these risks materialize, they may adversely affect the Group's business results and financial condition.