OKABE CO., LTD.

If growth strategies such as M&A, overseas expansion, and entry into new businesses are insufficient or delayed, the Company may suffer lost opportunities. There is also a risk of declining competitiveness relative to competitors who introduce new technologies and products in anticipation of changes in market needs that the Company fails to predict. As countermeasures, the Company examines the market size, future potential, and synergy effects of target areas, while promoting a system that prioritizes solving customer issues and advancing joint development with construction companies and industry-academia collaboration.

In the domestic construction market, which accounts for over 60% of net sales, the declining birthrate, aging population, and shrinking construction industry workforce are becoming serious issues, potentially making it difficult to secure workers. Demand declines due to economic downturns, US trade policy, and US-China decoupling risks could also affect business performance. As countermeasures, the Company focuses on developing products and construction methods that contribute to labor savings, and has established an IT Strategy Office to promote DX and maintain competitiveness.

Amid continuing increases in the price of steel, a key raw material, failure to appropriately pass on price increases to customers could deteriorate profitability and affect business performance. To enhance supply chain resilience, the Company has formulated a "Supplier Code of Conduct" and announced a "Declaration of Partnership Building." The Company also continuously pursues cost reduction efforts and appropriate price pass-through to customers.

The aging and attrition of employees, along with stagnation in the succession of technology and skills, pose a risk of declining competitiveness for the Group. As countermeasures, the Company is securing and developing diverse talent, including promoting women's participation, senior employees, and foreign workers, and has introduced referral and alumni recruitment as well as e-learning. The Company has also been certified as an Excellent Health Management Corporation (Large Enterprise Category) for three consecutive years since 2024, working to improve employee engagement.

Natural disasters such as earthquakes, tsunamis, and floods, as well as the outbreak and spread of new infectious diseases, and large-scale accidents or terrorism, could damage business locations, equipment, and systems, potentially causing serious disruption to production and sales activities. The Company conducts evacuation drills, disseminates hazard maps, and stockpiles food during normal times, and has formulated crisis response and business continuity plan (BCP) manuals, conducting regular training.

Insufficient response to decarbonized management could lead to a lower market evaluation and decreased orders, and there is also a penalty risk from changes to environmental regulations such as GHG emission standards. As countermeasures, the Company promotes decarbonized management through information disclosure based on TCFD and TNFD recommendations, obtaining SBT certification in October 2023, and the establishment of a Sustainability Committee and Sustainability Promotion Department. The Company is also deploying concrete initiatives such as launching a recycling service for P-Con and working toward commercializing blue carbon business.

As global expansion increases, there is a risk that insufficient management of overseas subsidiaries could deteriorate their financial condition, as well as a risk of illegal activity arising from insufficient understanding of local laws and regulations. As countermeasures, the Company is working to review and strengthen its governance structure, including risk management, compliance, and auditing, and strives to comply with environmental laws and regulations. The Company is also preparing for US-China decoupling risk by promoting in-house production of key products.

As overseas business expands, significant exchange rate fluctuations or a currency crisis could affect business performance. As a countermeasure, the Company works to mitigate foreign exchange fluctuation risk by appropriately executing forward exchange contracts and similar measures according to transactions.

If core systems are halted due to system failures, computer virus infections, cyberattacks, or similar events, production, sales, and accounting operations could be disrupted, making it difficult to supply products to customers. There is also a risk that leakage of confidential information or customer/business partner information could damage corporate credibility and result in liability for damages. As countermeasures, the Company is strengthening security measures both domestically and overseas (establishing an IT department at its North American site or outsourcing to specialized companies) and conducting education and awareness activities for employees.

If products with serious defects reach the market, the Company could incur substantial costs for replacement, recall, damages, and litigation, as well as suffer reduced social credibility, affecting business performance. The Company has obtained ISO9001 certification at its main business sites, and has built a cross-organizational quality control structure by establishing specialized quality control departments at each plant in addition to a dedicated quality control officer overseeing operations at the head office. The Company also works to reduce risk by maintaining liability insurance.