Tenryu Saw Mfg. Co., Ltd.

With the increase in transactions denominated in currencies other than the yen, such as the US dollar, euro, and Chinese yuan, exchange rate fluctuations directly affect profit and loss items such as sales and profit. In addition, translation differences arise from converting overseas assets and liabilities into yen, resulting in a significant impact on financial position. The importance of this risk is increasing as global business expansion progresses.

Price competition with competitors is intensifying further in the Japan, China, Asia, and Western markets, and price competitiveness has become a critical factor determining competitive advantage. The Group continues to strive for ongoing cost reductions and productivity improvements, but the competitive environment remains severe, raising concerns about the impact on profitability.

Overseas business expansion involves a wide range of inherent risks, including changes in laws, regulations, and tax systems in each country and region, changes in political situations, changes in the economic environment, issues related to hiring and labor management of local personnel, and social disruption caused by infectious diseases, terrorism, or natural disasters. If such unforeseen events occur, they could have a material impact on business performance and financial position.

The Group sells products, mainly Tipped Saw for Housing Materials, to OEM customers, and is therefore affected by the business performance, sales trends, and business strategies of major customers, creating a risk that order volumes may fluctuate significantly due to changes in demand or production adjustments. Furthermore, requests from OEM customers for price reductions and changes in procurement policies or trading terms could also have a material impact on business performance.

Although raw materials are procured from multiple external suppliers, stable procurement may become difficult due to market fluctuations, supply-demand tightness, geopolitical risks, natural disasters, or logistics disruptions. In addition, a surge in raw material prices leading to higher production costs would have a direct adverse impact on profitability.

If production facilities or equipment are damaged by natural disasters such as earthquakes, accidents such as fires, or terrorism, or if there is a disruption in the supply of electricity, water, or gas, or a stoppage in logistics, operations may be interrupted, leading to delays in production and shipment. As these events are beyond the Group's control, it is difficult to completely avoid them in advance.

There is a risk that unauthorized access, cyberattacks, computer viruses, or similar incidents could cause system failures, leakage of important information or customer information, or destruction or falsification of data. The Group strives to thoroughly manage information and implement security measures, but if an attack exceeding these measures occurs, it could have a material impact on business performance and financial position.

There is a risk that existing products and services could become obsolete due to advances or changes in cutting technology. If the Group fails to respond appropriately to trends in technological innovation, it could lead to a decline in competitiveness, having a material impact on business performance and financial position.

Although the Group conducts production activities based on quality control standards and strives to maintain and improve quality, if unforeseen defects occur, they could lead to a loss of customer trust and a decline in brand value and competitiveness. Furthermore, significant costs may arise from product recalls and compensation, which could have a material impact on business performance and financial position.

Securing and developing highly specialized personnel and management talent in various fields such as production, sales, development, and finance is essential for sustainable growth, and securing personnel with the language skills and information-gathering capabilities needed to support global expansion is also an important challenge. If the Group is unable to stably secure and develop such personnel, it could have a material impact on business performance and financial position.