TAKEDA MACHINERY CO., LTD.

The occurrence of a large-scale financial crisis, trade friction, or geopolitical risk could trigger a rapid credit contraction, leading to prolonged stagnation in corporate capital expenditure and a significant decline in demand for the Group's products. Intense price competition with competitors and reduced liquidity in funding may also be expected. In response, the Company aims to build a balanced financial structure by securing cash on hand and internal reserves.

Bankruptcy or business withdrawal of suppliers of specialized materials and parts, damage from disasters, or significant fluctuations in exchange rates and raw material prices could destabilize procurement. This may lead to deteriorating profitability if increases in manufacturing costs cannot be passed on to sales prices, as well as stagnation or suspension of production activities. In response, the Company is implementing standardization and commonization of materials and parts, diversification of suppliers, and advance procurement.

Delays in responding to advanced technologies or a divergence from market needs could result in the Company falling behind competitors in product development. This may lead to a reduction in market share due to competitors' early introduction of groundbreaking new products and the obsolescence of the Company's own products, significant price reductions on existing products, and deteriorating profitability due to difficulty in passing on rising development costs. In response, the Company promotes marketing initiatives that integrate its sales, technical service, and technology development departments.

The declining birthrate and aging population may make it difficult to secure the human resources necessary for the business, in addition to delays in successor development and the potential incapacity of key executives to perform their duties. This could result in lost business opportunities due to delayed production delivery, decreased customer satisfaction due to delayed maintenance services, and disruption to sales and internal operations, potentially affecting the maintenance and expansion of the business. In response, the Company is improving its personnel system, promoting skill development through qualification acquisition programs, enhancing OJT and external training, and improving productivity through the use of ICT.

As production is concentrated at a single site, if that site is affected by a natural disaster such as an earthquake, flood, or snow damage, an accident such as a fire or explosion, or an outbreak of a novel infectious disease, it could result in significant damage and a stagnation or suspension of corporate activities. If recovery takes a long time, the impact could extend beyond temporary damage. In response, the Company periodically reviews its insurance coverage and emergency response regulations, has established an emergency response headquarters, and implements infectious disease countermeasures in accordance with government agency guidelines.

Cyber attacks, unauthorized access, computer virus infection, internal equipment failure, or disasters could result in the leakage or loss of confidential information and personal information, or a large-scale failure of core systems. This may lead to a loss of social trust and market competitiveness, a reduction in market share due to the loss of personnel and business partners, and stagnation of corporate activities. In response, the Company backs up important data, strengthens password management, implements security software, and provides internal education on information management.