AMADA CO.,LTD.

The Group's products are used as production equipment across a wide range of fields, including transportation equipment, home appliances, information and communication equipment, general machinery, and construction materials, and are therefore relatively insensitive to fluctuations in specific industries. However, capital expenditure trends across industries as a whole may affect business performance. A global economic downturn or a phase of restrained capital expenditure could lead to a decline in orders.

The overseas sales ratio as a percentage of consolidated revenue reached 64.3% in the current fiscal year, with production and sales bases deployed across North America, Europe, Asia, and other regions. Conflicts, terrorism, changes in the political and social situation, and unforeseen regulatory changes in the countries where the Group operates may affect business performance, resulting in a high degree of dependence on geopolitical risk.

The markets in which the Group operates are subject to intense price competition. While the Group strives to maintain appropriate selling prices through the introduction of new products and solution-oriented engineering business initiatives, further intensification and prolongation of competition could lead to declines in selling prices that pressure business performance.

The Group exports products primarily denominated in US dollars and euros, and strives to hedge risk through foreign exchange forward contracts and increasing the ratio of overseas production. However, if exchange rate fluctuations exceed expectations, business performance may be affected through the occurrence of foreign exchange gains or losses and changes in product competitiveness. There is also an impact from translating the assets and liabilities of overseas consolidated subsidiaries into yen.

The Group procures parts and materials from multiple suppliers, but procurement prices may fluctuate significantly due to changes in raw material prices and energy prices such as crude oil. In addition, difficulties in maintaining a stable supply due to industry supply-demand conditions, circumstances at suppliers, or natural disasters may lead to a decline in production efficiency, which could affect business performance.

The Group designs and manufactures products based on ISO quality management systems and conducts risk assessments and product safety checks through design reviews. However, if a product defect were to occur, recall costs or damage compensation costs that cannot be covered by insurance or other means could have a material impact on business performance.

The AMADA Group Environmental Eco Committee addresses environmental issues including climate change, and the Group markets resource-saving, low-noise, and energy-saving equipment as AMADA Eco Products. However, if strengthened environmental regulations in various countries make it difficult to sell current products or use certain parts, business performance may be affected through increased design change costs and research and development expenses.

The Group has established a strict management system for confidential information and personal information, and promotes a cyclical process of risk assessment and countermeasure planning through its Cybersecurity Committee, as well as strengthening global IT governance. However, if unauthorized access occurs due to cyberattacks or computer viruses, business performance may be affected through the suspension of business systems, information leaks, and loss of trust.

The Group operates production and sales bases globally, and if a natural disaster such as an earthquake or flood, or a widespread infectious disease outbreak, were to cause extensive damage and recovery were to take a long time, business performance could be affected. As part of its BCP measures, the Group is promoting risk diversification through the introduction of seismic isolation devices at the Isehara Plant, construction of a disaster prevention energy center, and expansion of domestic and overseas manufacturing bases.

The Group seeks to maintain the competitiveness of its global business through the recruitment and development of diverse personnel involved in manufacturing, development, sales, and other functions. However, if diverse employees leave or attrition increases due to a declining working population or growing labor market fluidity, business performance may be affected through a decline in competitiveness.