NHK SPRING CO., LTD.

Because the Group supplies automotive-related and information/communication-related products globally, there is a risk that economic downturns or demand contractions exceeding forecasts may occur in various regions due to prolonged global inflation, monetary tightening, heightened geopolitical risk, and shifts in the economic and industrial policies of major countries. Multiple factors may materialize simultaneously, and given the growing uncertainty in the business environment outlook, it is difficult to make a reasonable estimate of the impact.

In businesses involving overseas production and sales, yen appreciation risks reducing the price competitiveness of export products, while yen depreciation risks increasing the cost of raw materials procured from overseas. The Group strives to minimize short-term adverse effects through agile foreign exchange hedging transactions; however, it is difficult to completely eliminate this risk, and exchange rate fluctuations beyond forecasts may affect business results and financial condition.

The Group externally procures major raw materials such as steel, as well as various materials and energy. While significant price fluctuations due to changes in market conditions are premised on being passed through to selling prices, timing gaps in reflecting such pass-through may cause the impact on business performance to extend beyond the accounting period. In addition, if shortages of raw materials or components occur due to accidents or natural disasters at suppliers, changes in import/export regulations, supply restrictions arising from economic security concerns, geopolitical risks, or other factors, this may lead to a decline in production activities and affect business results and financial condition.

The Group has production bases in the United States and other countries overseas, and is subject to tariffs when procuring raw materials and components from other countries. Reviews of trade and economic security policy originating in the United States have rapidly advanced tariff rate increases and expansions in the scope of covered products among various countries, and the future direction remains uncertain. If changes in tariffs cannot be passed through to selling prices, or if the timing of such pass-through is delayed, this may affect business results and financial condition.

Although the R&D Division actively promotes basic and applied research, the process of new product development and market introduction is complex and uncertain, and inherently carries risks such as difficulty in continuously securing development funds and resources, failure to recover large-scale investments, declines in selling prices due to intensifying competition, and loss of technological novelty due to competitors' development of new technologies or changes in market needs. If these risks materialize, they may reduce future growth and profitability, affecting business results and financial condition.

Although products are manufactured at each production site in accordance with globally recognized quality control standards, it is not possible to fully guarantee the elimination of defects in all products or the absence of future recalls. While the Group carries product liability insurance, there is no guarantee that the final amount of damages will be sufficiently covered by insurance, and if a large-scale recall or product liability claim occurs, the resulting substantial cost burden and significant impact on corporate reputation may reduce net sales and affect business results and financial condition.

In each country where the Group conducts business, it is subject to a wide range of legal regulations, including business and investment licensing, import/export controls, and laws related to trade, antitrust, patents, taxation, environment, and recycling. Although the Group continuously strives to practice compliance, failure to comply with these regulations could result in tangible and intangible damages such as direct cost increases, social sanctions, and reputational harm.

Depending on the region or country, there is a risk of unexpected changes in laws and regulations, difficulty in securing personnel, labor disputes and sharp increases in labor costs, and social unrest caused by extreme demonstrations, riots, or terrorism, arising from cultural and legal differences, social and political instability, and inadequate infrastructure. If such events occur, they may disrupt local production, and if prolonged, could have an even greater impact on business results and financial condition.

In the event of natural disasters such as earthquakes, typhoons, or floods, accidents such as fires or power outages, or the outbreak of infectious diseases, additional costs may arise from equipment failure or damage at manufacturing sites, and difficulty in maintaining an optimal supply chain may affect business results and financial condition. Although the Group has established a Sustainability Promotion Committee, developed BCP and risk management regulations, and conducted education and awareness activities, there remains a risk that production and delivery activities could be disrupted in the event of a large-scale disaster or widespread power outage or infectious disease outbreak, despite these measures.

As the importance of information systems in business activities increases, the Group implements appropriate security measures in both hardware and software; however, there is a risk that cyberattacks or unauthorized access exceeding expectations could cause core information systems to stop functioning or lead to leaks of corporate and personal information. Should such events occur, they may affect business results and financial condition.