ABIST Co.,Ltd.

The automotive-related sales composition ratio in the Design & Development Outsourcing Business is high at 60% (FY2025, ending September 2025). If the spread of EVs and modularization leads to a decrease in the number of parts, or if client companies reduce their design and development investment or shift overseas, this will directly affect business performance through a decline in engineer utilization rates. As a countermeasure, the company has set automotive lamps and interiors as core technology areas and is proceeding with engineer shifts, but there remains a possibility that it may be difficult to respond to environmental changes that exceed expectations.

Sales to Toyota Motor Corporation account for 24.8% of total sales (FY2025, ending September 2025), and if Toyota and related parts manufacturers experience business downturns or reduce orders, the impact on performance would be significant. The company is working to improve its technical capabilities and expand sales into new fields and with new clients, but the high degree of dependence on a single customer remains a structural risk.

Engineers are the most important management resource in the Design & Development Outsourcing Business. If new graduate and mid-career hiring does not proceed as planned, or if the number of resignations greatly exceeds expectations, the company will be unable to meet client demand for engineers and will lose sales opportunities. The company has established a recruitment management department, is actively approaching science and engineering universities and technical colleges, and is utilizing online media, but there is a risk that securing talent will become difficult due to intensifying competition in the engineer market.

In the Design & Development Outsourcing Business, over 90% of cost of sales consists of labor costs, so wage increases directly worsen profitability. Amid ongoing calls from the government and Keidanren for wage increases against a backdrop of global price inflation, if the rate of wage increase becomes substantial and rapid, it could have a material impact on business performance and financial condition.

Since all employees are regular full-time employees, labor costs (cost of sales) are incurred even during periods when employees are not dispatched to client companies or not assigned to contracted work, creating a structure in which a decline in utilization rate simultaneously causes a decrease in sales and an increase in the cost ratio. Changes in the economic environment, changes in client company trends, intensifying competition, and large-scale disasters can all be factors in a decline in utilization rate. The company strives to maintain a high utilization rate through the development of business continuity plans and engineer skill-up training.

In its contracted services, the company handles large volumes of highly confidential information and know-how related to client companies' product development. If an information leak occurs, it could result in a loss of social credibility and damages liability risk. The company has taken measures such as obtaining ISO/IEC 27001 certification and enrolling in IT business liability insurance, but the risk of leakage due to cyberattacks or internal misconduct cannot be completely eliminated.

The core Design & Development Outsourcing Business is subject to regulation under the Worker Dispatching Act, and the Beauty & Health Products Manufacturing and Sales Business, including hydrogen water products, is subject to regulations such as the Food Sanitation Act, the Specified Commercial Transactions Act, and the Act against Unjustifiable Premiums and Misleading Representations. If amendments to relevant laws and regulations have a material impact on the business, or if legal violations occur, business continuity may be hindered, requiring ongoing compliance efforts.

If competition intensifies in the design and development outsourcing industry due to market contraction or new entrants from adjacent industries, this would lead to a decrease in the number of dispatched engineers, a decline in unit prices, and a decrease in contract amounts, worsening business performance. The company focuses on securing excellent engineers and employee training to avoid excessive price competition, but if the competitive environment deteriorates rapidly and severely, it could affect business performance and financial condition.

In contracted services, the company bears full responsibility for the execution and completion of work and delivers the final product, creating a risk of being held liable for defect warranty or product liability if defects arise in the delivered product. If damages costs are incurred, this could affect business performance and financial condition, making the maintenance of a quality control system an important issue.

In the beverage manufacturing and sales business, including hydrogen water products, if mail-order sales to individuals and OEM sales to corporations do not proceed as planned, there is a risk that investment funds for factory construction and other purposes cannot be recovered. In addition, if a hygiene management accident occurs at any stage of manufacturing, storage, transportation, or sales, causing harm to customers' health, this could impact business performance and financial condition, damage the brand, and result in legal liability.