WAIDA MFG.CO.,LTD

The machine tool industry is characterized by extremely large sales fluctuations, and the Group's net sales and profits fluctuate significantly due to the impact of economic cycles. Since business performance is directly linked to capital investment trends in the manufacturing industry, the impact on operating results is substantial during economic downturns. As a countermeasure, the Group is strengthening its profit management system to build a structure capable of securing profits even during economic slowdowns.

In the current consolidated fiscal year, Mold-related Grinding Machines and Cutting Tool-related Grinding Machines accounted for 83.5% of net sales (48.0% mold-related, 35.5% cutting tool-related), indicating a high degree of dependence on specific industries. Since business performance is linked to capital investment trends among manufacturers using precision molds and manufacturers/users of cutting tools, restraint in investment by these industries directly leads to deterioration in business performance. The Group seeks to mitigate this risk by expanding sales regions and introducing new products into new fields.

In the current consolidated fiscal year, the ratio of overseas net sales reached 56.5%, indicating a high degree of dependence on markets in Asia (including China), Europe, and the Americas. Economic fluctuations and political changes in each overseas region may directly affect business performance. The Group strives to identify risks at an early stage through information gathering via local agents, sales offices, and branches.

Although settlement is in principle made in yen, the increase in foreign currency-denominated transactions accompanying active sales activities in overseas markets means that fluctuations in exchange rates affect price competitiveness in local currencies. In addition, since the local currency-denominated financial figures of overseas subsidiaries are translated into yen, consolidated business performance can be affected solely by exchange rate fluctuations even without any actual change in underlying economic conditions.

For some parts of products requiring advanced technology, stable procurement is difficult, and there is a risk that alternative suppliers cannot be secured. If supply is disrupted due to natural disasters, accidents, or deterioration in the business environment at suppliers, delivery delays and lost business opportunities may occur, and profit margins may deteriorate due to rising prices of procured parts. The Group strives to ensure stable procurement through close coordination with suppliers and regular monitoring of the supply chain.

It is difficult to completely prevent product defects, and if claims or returns occur, repair and collection costs and a decline in sales volume may affect business performance. The Group has established a company-wide meeting body for quality improvement and works to improve quality by analyzing the occurrence of claims and defects and implementing improvement measures.

The manufacture of the Company's products requires highly specialized technical skills, and if the retirement of skilled personnel or a shortage of human resources delays the transfer of technology to the next generation, it may significantly affect future business development, performance, and growth. The Group is addressing this by introducing systems such as extending the retirement age to continue employing skilled personnel and facilitate technology transfer.

The machine tools produced and sold by the Group may in some cases be subject to export controls under the Foreign Exchange and Foreign Trade Act as goods that could potentially be used in the development of weapons of mass destruction. Failure to comply with the Foreign Exchange and Foreign Trade Act and related regulations could result in legal sanctions and loss of social credibility, affecting business performance, and tightening of regulations due to changes in the international situation is also a risk factor. The Group addresses this through a dedicated department overseeing export controls and the strict operation of internal rules and manuals.

Because the Group operates globally, it is affected by changes in public regulations and policy trends in various countries and regions. Tightening or changes in regulations may lead to increased compliance costs and burdens such as fines, potentially affecting profit and loss. The Group seeks to mitigate this risk through information gathering via local agents, sales offices, and branches.

In the event of large-scale disasters such as typhoons or flood damage, the spread of infectious diseases, or conflicts, terrorism, or political instability, business continuity may be affected due to the suspension of business sites, damage to facilities, and damage to the supply chain. There is also a risk that the resulting economic downturn could spill over into business performance. The Group has established a meeting body concerning health and safety, and strives to reduce risk through the preparation and periodic review of emergency response manuals and the implementation of drills.