SUNCALL CORPORATION

In the automotive field (63.2% of sales), declining demand for ICE vehicles, slowing demand for EVs, and increasing demand for HVs are occurring simultaneously, affecting production and development activities for products for each vehicle type. In the electronics and communications field, the Group has completed its withdrawal from the HDD Suspensions business and is shifting toward capturing expanding demand in communications-related products. As countermeasures, the Group is working to improve the accuracy of demand forecasting and strengthen resilience to fluctuations, develop higher value-added EV-related products, and expand sales into new business fields (medical/nursing care and environment/energy).

The introduction of new products by competitors, intensifying price competition, and demand shifts toward lower-priced products may affect business performance. The Group differentiates itself through its integrated production system from materials to finished products and its global business development, and by establishing product development, production efficiency, and quality assurance systems across the Group.

The ratio of overseas sales on a consolidated basis has reached approximately 59%, and given the substantial volume of foreign-currency-denominated transactions arising from production and sales activities in North America, China, and Southeast Asia, fluctuations in exchange rates may affect business performance. As countermeasures, the Group conducts hedging transactions such as forward foreign exchange contracts with financial institutions to suppress short-term fluctuations in major currencies, while also promoting the localization of fund procurement by overseas subsidiaries.

Global fluctuations in crude oil and raw material prices may significantly affect production costs. As countermeasures, the Group diversifies procurement risk through multiple sourcing, promotes production efficiency improvement and cost reduction activities, and, for market fluctuations that are difficult to absorb, implements activities to pass costs through to appropriate selling prices.

Constraints on human resources due to the declining birthrate, aging population, and changes in working styles pose a risk that could hinder the succession of precision plastic forming technology and business continuity. Personnel with international sensibilities are essential for global business development, and a shortage of human resources could become an obstacle to the succession of technology and business. As countermeasures, the Group is working to improve engagement by developing a comfortable working environment and strengthening its recruitment and development system to secure diverse human resources.

In the course of conducting business, the Group may face litigation, and unexpected large liability for damages could affect its business performance and financial condition. As countermeasures, the Group strives to prevent litigation in advance through contract review and has established a system to work with external experts to minimize the impact on the Group when litigation occurs.

It may be difficult in some cases to prevent third parties from imitating technology or manufacturing similar products, and there is a risk that competing products could enter the market through the invalidation or circumvention of the Group's own patents, as well as a risk of being accused of infringing on the intellectual property rights of other companies. As countermeasures, the Group has established a dedicated organization to promote appropriate acquisition and management of rights and legal responses.

In handling customer information (including personal information) and confidential information, if information leakage or loss occurs due to cyberattacks, hacking, unauthorized access, or similar incidents, this could result in a decline in corporate image, a decline in competitiveness, and a substantial burden of damages or remediation costs. As countermeasures, the Group is working to establish information handling management regulations applicable to all officers and employees and to thoroughly enforce information management.

If natural disasters such as earthquakes, accidents, civil unrest, or infectious disease pandemics occur, this may affect the business through a decline in demand for final products or the interruption of production activities at the Group, its customers, or its suppliers. As countermeasures, the Group has established a disaster prevention and crisis management manual, conducts regular equipment inspections and disaster prevention drills, and has built an early recovery system through the development of a Business Continuity Plan (BCP).

If compliance violations occur, such as harassment, violations of import/export-related laws, violations of antitrust law, or violations of environmental laws, this could affect the business and financial condition through administrative sanctions, imposition of surcharges, or suspension of production. In addition, unexpected risks arising from the enactment, amendment, or abolition of laws and regulations in Japan and overseas, or major changes in regulations, cannot be ruled out. As countermeasures, the Group is working to ensure thorough compliance with laws and regulations through the establishment of a Compliance Committee, the formulation of a "Code of Conduct," and the operation of a "Hotline Reporting System."