NITTOSEIKO CO.,LTD.

As demand is affected by the business conditions and production trends of the automotive-related, home appliance, precision equipment, and housing-related industries, economic downturns, a decrease in demand from major customers, and the progress of an offshore shift could adversely affect business performance. In addition, international trade disputes and tariff increases due to protectionism also pose a risk of pressuring profits. The Company aims to build a revenue base that is not affected by changes in the business environment.

Due to intense competition in domestic and overseas markets, the Company is constantly exposed to downward pressure on selling prices, and further price declines caused by intensifying competition could adversely affect business performance and financial condition. The Company strives to secure profits through differentiation by developing high-value-added products and through cost reductions.

A shortage of supply of raw materials, parts, etc., or a sharp rise in procurement prices could not only reduce production volume but also lower profit margins and price competitiveness, adversely affecting business performance and financial condition. The Company promotes cost reduction through the standardization of parts and multiple sourcing, and reflects market price fluctuations that cannot be absorbed in appropriate selling prices, taking into account the trends of competitors.

If defects or other problems occur in products or services, the Company may be held liable for damages, and its reliability and business performance could be adversely affected. The Company has obtained external certifications for ISO9001 and IATF16949, and is committed to building quality into every stage from development and design to production, as well as thoroughly managing the quality of its suppliers.

In overseas operations centered on Asia, deteriorating economic and political conditions or security in each country could adversely affect business performance and financial condition. There is also a risk that the yen-denominated amounts of assets, liabilities, and sales related to foreign-currency-denominated transactions may fluctuate significantly due to exchange rate movements. The Company minimizes this risk through early detection via regular information sharing with subsidiaries, as well as through forward foreign exchange contracts with financial institutions for major currencies such as the US dollar and Thai baht.

The Company is required to comply with various regulations, such as business licensing, trade, tariffs, and intellectual property rights in the countries and regions where it operates, as well as environmental laws and occupational health and safety laws. Violations could result in restrictions on business activities and substantial costs or compensation, adversely affecting business performance. The Company strives to prevent problems from occurring through compliance practices based on its

As the Company procures working capital through borrowings from financial institutions, a deterioration in the financial environment, such as a rapid and significant rise in interest rates, could adversely affect business performance and financial condition. The Company has introduced a CMS (Cash Management System) and is working to reduce interest-bearing debt and strengthen its financial structure by prioritizing the use of surplus funds within the group.

The Company actively utilizes M&A as an important management strategy; however, if contingent liabilities arise at the target company or if there is a divergence from the original business plan, and the expected synergies or business expansion results are not achieved, an impairment loss on goodwill may occur, adversely affecting business performance and financial condition. The Company strives to reduce this risk by conducting due diligence in advance and by strengthening its oversight function through regular monitoring of acquired companies at board of directors' meetings, management meetings, and other venues.

At its facilities in Japan, Asia, North America, and Europe, the occurrence of earthquakes, fires, typhoons, floods, wars, terrorism, infectious diseases, etc. could paralyze manufacturing lines and information systems and disrupt the supply chain, halting production and shipments, and could have a severe impact on business performance and financial condition. The Company works to achieve early recovery and minimize impact through the organization and training of an internal disaster prevention structure, earthquake-resistance measures, and the development of a Business Continuity Plan (BCP).

The Company holds personal information and confidential information belonging to customers, business partners, and itself. If information leakage or destruction, falsification, or system shutdown of important data occurs due to cyberattacks, unauthorized access, computer viruses, etc., this could damage the Company's credibility and result in substantial damages, significantly impacting business performance and financial condition. The Company is working to strengthen technical measures led by its information systems department, as well as to raise employee awareness through information security training conducted at the time of hiring and on a regular basis.