FUJISASH CO.,LTD.

The majority of the Group's operating revenue depends on domestic demand in Japan, and fluctuations in economic conditions, the backlog of construction orders, and the number of new housing starts directly affect business performance. When the domestic economy deteriorates, the risk of deterioration in receivables such as accounts receivable and electronically recorded monetary claims also increases, potentially requiring additional provisions for allowance for doubtful accounts. The structure of high dependence on a specific domestic market poses a risk of undermining the stability of earnings.

The Group holds interest-bearing debt such as borrowings from financial institutions, and if interest rates rise, an increase in interest expenses could adversely affect business performance and cash flow. There is currently no disclosure of specific hedging measures, raising concerns about sensitivity to changes in the interest rate environment.

With the increase in foreign currency-denominated transactions, sharp exchange rate fluctuations could significantly affect profit and loss. As a risk mitigation measure, the Group conducts hedging transactions such as forward foreign exchange contracts with financial institutions, but complete hedging may be difficult during periods of sharp fluctuation. Since exchange rates are also linked to procurement costs of aluminum ingot, combined effects may arise.

The majority of sales, centered on the Building Materials Business and Aluminum Shapes External Sales Business, consist of businesses that use aluminum ingot as their main raw material, creating a risk that aluminum ingot prices will fluctuate significantly due to changes in LME price levels and foreign exchange rates. In periods of rising market prices, if increases in raw material costs cannot be fully passed on to selling prices, earnings will be squeezed. This presents a structural vulnerability in which fluctuations in raw material costs directly affect overall business performance.

Competition with rivals in the building materials market is unavoidable, and if the market environment changes significantly, the Group could face intense price competition that adversely affects business performance. The Group strives to maintain competitiveness by improving products and services, but in a shrinking market, downward pressure on prices could intensify.

The Group has a high degree of dependence on the Building Materials Business for both sales and profit, resulting in a structure in which fluctuations in that business's performance significantly affect overall business results. Amid an overall downward trend in construction investment, the Group is promoting expansion of non-sash businesses such as the Aluminum Shapes External Sales Business and the Environmental Business, as well as the renovation business, but diversification of the business portfolio remains a work in progress.

The Group is subject to a wide range of legal regulations, including the Construction Business Act (fixtures construction business, machinery and equipment installation construction business), the Water Pollution Control Act, the Waste Management Act, and the Consumer Product Safety Act. Any revision, abolition, or introduction of new laws and regulations could increase compliance costs or restrict business activities, thereby affecting business performance.

Natural disasters such as earthquakes and tsunamis, accidents such as fires and power outages, and pandemics of infectious diseases pose a risk of damage to production, sales, and logistics facilities or infrastructure disruptions, leading to interruption of business activities. The Group has implemented measures to minimize the impact, but in the event of a large-scale disaster, serious impact on production and shipments may be unavoidable.

The Group is subject to the Industrial Waste Management Act and various environmental laws and regulations concerning air, water quality, noise, vibration, and soil contamination, and while it carries out environmental preservation activities under an environmental management system, the occurrence of any environmental problem could affect business performance and financial condition. In addition, the Group is promoting product development, use of recycled aluminum materials, introduction of renewable energy, and fuel conversion as decarbonization measures, but there is a risk of increased costs to respond to further tightening of regulations.