YAMAZAKI CO., LTD.

Competition with peer companies is intensifying due to the overseas relocation of manufacturing operations, with the Transportation Equipment Business affected by trends in motorcycle production and the Machine Tools Business affected by capital investment trends in the automotive industry. Price pressure and customer attrition resulting from intensified competition may affect the financial position and business results. As countermeasures, the Company is promoting the expansion of over 600 types of standard units, the visualization of individualized (tacit) technical skills, repeated design reviews, and product refinement through improvement of proprietary technology and incorporation of external technology.

In the event of a natural disaster such as an earthquake or weather-related disaster, the Company Group and its business partners may suffer various forms of damage, which could affect the financial position, business results, and cash flows. The Company currently implements earthquake countermeasures, reviews, and evacuation drills, but recognizes internally that these measures are not complete. The Company's policy is to continuously strengthen disaster and BCP (business continuity planning) countermeasures.

If an infectious disease outbreak or similar event occurs on a scale exceeding expectations, business operations may become difficult, potentially affecting the financial position, business results, and cash flows. As countermeasures, the Company has established codes of conduct for employees and thoroughly disseminated specific policies such as temperature checks and visitor handling procedures, and in the event of an emergency, will promote changes to work arrangements such as telework. The Company has also established a system for disclosing the status of initiatives within the supply chain and sharing information.

Securing and developing capable human resources is essential to maintaining a competitive edge over peer companies, and failure to achieve this may affect the financial position, business results, and cash flows. To address the prolonged shortage of human resources, the Company is promoting the strengthening of skill transfer and human resource development through the visualization of skills, as well as mechanization through the introduction of high-precision equipment. The Company is also working to raise its profile through regular updates to its recruitment website and active participation in job fairs.

Since the non-consolidated financial statements of overseas subsidiaries are prepared in local currency and translated into yen when preparing the consolidated financial statements, fluctuations in exchange rates may affect the financial position, business results, and cash flows. The annual securities report does not describe specific countermeasures such as hedging instruments.

As the Company Group's products use steel materials and semiconductors, a surge in raw material prices or a semiconductor shortage may affect the financial position, business results, and cash flows through an increase in manufacturing costs. The annual securities report does not describe specific countermeasures such as diversification of procurement sources or building up inventory.

If impairment processing becomes necessary for fixed assets held by the Company Group due to a decline in asset value or other factors, this may affect the financial position, business results, and cash flows. The annual securities report does not describe the specific scale of fixed assets held or countermeasures against impairment risk.

The Machine Tools Business is centered on made-to-order production, and since many customer companies have a fiscal year-end in March, sales tend to be concentrated in the fourth quarter, particularly in March. If sales recognition is delayed beyond the fiscal period-end due to delays in orders or acceptance inspections by customer companies, this may affect the financial position, business results, and cash flows for that period. The annual securities report does not describe specific countermeasures against this seasonality risk.