Makino Milling Machine Co., Ltd.

The Company's sales are highly dependent on capital investment in the manufacturing sector in Japan, Asia, and the Americas. During economic downturns, corporate investment appetite tends to decline more sharply than the level of the economic downturn itself, creating a risk that orders and sales of machine tools, which are capital goods, may decrease significantly. As a countermeasure, the Company is working to acquire customers across a broad range of regions and industries, while also enhancing recurring revenue such as services and software.

Many of the Company's products are used by companies related to the automotive industry, and capital investment trends in that industry have a major impact on the supply-demand environment for machine tools, creating a risk that the automotive industry's investment cycle directly affects the Company's sales. On the other hand, sales to growth fields such as IT and digital home appliances are subject to volatile supply-demand fluctuations and can vary significantly from period to period. The Company is working to diversify its customer base in order to reduce its dependence on specific industries.

More than half of the Company's products are sold overseas, and the Company has expanded its operations into multiple countries, so fluctuations in foreign exchange rates directly affect sales and profit. As a countermeasure, the Company utilizes hedging instruments such as forward exchange contracts to mitigate foreign exchange fluctuation risk.

Machine tools are composed of a wide variety of parts and raw materials. If the supply-demand environment becomes tight, price increases may put pressure on profit, and there is a risk that production and sales could be affected if the required quality, quantity, and delivery times cannot be secured. As a countermeasure, the Company maintains appropriate inventory levels according to procurement difficulty, strengthens collaboration with suppliers, develops new suppliers, and implements multi-vendor purchasing.

The Company has expanded its operations into various countries pursuing industrial modernization, and unforeseen changes in the political, economic, or social conditions of these countries, or the establishment or strengthening of legal regulations, could affect sales and profit. As a countermeasure, the Company has established regional holding companies and built management structures staffed by local personnel who are well versed in local conditions, enabling flexible responses tailored to regional characteristics.