Sankyo Tateyama,Inc.

The Group's products are widely used in the construction, retail, automotive-related, and other industries, and fluctuations in domestic and overseas economic conditions, construction order volumes, housing starts, private consumption trends, and other factors may affect operating results. As a countermeasure, the Group has built a business structure diversified across the four segments of "Building Materials," "Materials," "Commercial Facilities," and "International," aiming for a system in which the impact on a specific segment can be offset by other businesses.

Fluctuations in the prices of raw materials such as aluminum ingots and steel, energy procurement costs such as electricity and fuel, labor costs, logistics costs, and other prices may affect operating results. For aluminum ingots, the main raw material, the Group works to diversify risk through the introduction of derivative transactions and long-term purchase contracts, while also pursuing cost reductions through the standardization of components, multiple sourcing, and improved logistics efficiency.

Fluctuations in major currencies such as the US dollar, euro, Thai baht, and Chinese yuan may have a material impact on operating results and financial position through changes in the yen-equivalent value of assets, liabilities, and sales arising from foreign-currency-denominated transactions. As a countermeasure, the Group implements hedging transactions such as forward foreign exchange contracts with financial institutions to minimize the impact.

The Group holds interest-bearing liabilities such as borrowings from financial institutions, and if interest rates rise, an increase in interest expense and other factors may affect operating results and cash flows. The Group works to reduce this risk by fixing interest rates through hedging transactions such as interest rate swaps.

The Group's growth potential and profitability may be affected by the introduction of new products by competitors and price competition. As a countermeasure, the Group works to develop differentiated and high-value-added products that are less susceptible to price competition, while also promoting research and development of aluminum horizontal recycling technology and focusing on product development aimed at realizing a circular economy.

With sales and production bases located overseas, the occurrence of social and economic disruptions in various countries, such as natural disasters, political instability, infectious diseases, war, terrorism, price increases, and strikes, may affect operating results and financial position through fluctuations, suspension, or restoration of overseas business activities. The Group gathers information on political and fiscal conditions and policy changes, and works to detect early signs of political instability and other risks.

A loss of social trust due to environmental pollution, and increased capital investment costs resulting from changes in relevant laws and regulations, may affect operating results and financial position, and responses to climate change and greenhouse gas reduction are also required. The Group has established a "Sustainability Policy Committee" and a "Sustainability Promotion Committee," chaired by the President and Representative Director, to identify, analyze, and evaluate risks and opportunities based on the TCFD recommendations, and has obtained ISO14001 certification at its major in-house plants. During the current consolidated fiscal year, the Group newly added "conservation of biodiversity" to its materiality issues and has positioned the effective utilization of resources as its most important theme.

Given that the Group holds a large amount of corporate and personal information, an unexpected information leak could result in damages claims and a loss of social trust, which may affect operating results. The Group has established an "Information Security Committee" and, in addition to employee education through self-checks, training videos, and virus email response drills, has implemented technical measures such as introducing encryption software on PCs taken outside the company and installing a suspicious email detection system.

Natural disasters such as earthquakes and floods, accidents such as fires and power outages, and the spread of infectious diseases may damage production, sales, and logistics bases and facilities or lead to suspension of operations, and the resulting restoration efforts or suspension of business activities may affect operating results and financial position. The Group has established initial response procedures, reporting channels, and the establishment and roles of emergency response headquarters for emergencies, conducts regular disaster prevention drills and equipment inspections, and has reorganized its early recovery system through revisions to its Business Continuity Plan (BCP).

If it becomes difficult to acquire capable talent and prevent attrition due to intensified competition for employment and rising turnover rates resulting from a declining working population associated with the falling birthrate and aging population, this may affect operating results. The Group works to secure employment and develop human resources through the promotion of year-round career hiring, diversity promotion (utilization of older workers, women, and foreign nationals), various training and self-development support programs, engagement surveys, and the promotion of work-life balance.