KOIKE SANSO KOGYO CO., LTD.

Since the Machinery & Equipment segment (Medium/Large Cutting Machines, Welding Machinery, etc.) and the High-Pressure Gas segment's piping construction work adopt the acceptance basis for revenue recognition, delays in customers' acceptance preparations or deterioration in the business environment due to political upheaval at overseas export destinations could hinder the progress of installation work and delay the timing of revenue recognition. This could cause year-end sales and profit to fall below plan. The Group carefully manages the progress of manufacturing and construction work, striving to deliver as scheduled.

While the Machinery & Equipment segment's Medium/Large Cutting Machines and Welding Machinery, among others, adopt a made-to-order production system, intensifying competition with rival companies could lower order prices, adversely affecting sales and profit margins. A decline in price competitiveness could affect overall business results. The Group is addressing competition from rivals by developing new technologies and new products and strengthening price competitiveness.

Deterioration in customers' business performance, among other factors, could delay the collection of trade receivables or result in bad debts. Although the Group checks the collection status and delinquency status of receivables by customer, there is no guarantee that the occurrence of delinquent receivables can be completely prevented, which could adversely affect its financial position. To minimize this risk, the Group continues to strengthen information gathering on customers, credit management, and receivables protection.