Nabtesco Corporation

With business sites located around the world, wind and flood damage, large-scale earthquakes, pandemics, and other events driven by climate change may cause human and physical damage, disruption to material procurement, and severance of logistics networks, thereby affecting business performance and financial condition, and there is no guarantee that such losses will be sufficiently covered by insurance. The Group systematically implements measures such as climate change risk assessment by the ESH Committee, setting long-term greenhouse gas reduction targets, and conducting BCP drills and seismic reinforcement.

In the unlikely event that a serious defect leading to a recall or product liability (PL) claim occurs, significant costs may arise from litigation and recall responses, affecting business performance and financial condition. The Group has established a management system based on quality assurance systems such as ISO9001, IATF16949, and JIS-Q9100, and is working to continuously improve quality through rigorous quality and product safety reviews at the development and design stages and through the "Quality/PL Committee," which reports directly to the CEO.

Securing and developing excellent human resources in manufacturing, development, sales, and other functions is fundamental to maintaining competitiveness; however, if the Group is unable to sufficiently secure and develop human resources due to intensifying competition for talent or employee turnover, this could lead to a decline in competitiveness, affecting business performance and financial condition. The Group is working to secure, retain, and energize diverse human resources through alumni recruitment, referral recruitment, the establishment of a professional employment system, health management initiatives, and the operation of an internal job posting system.

As the Group is involved in diverse industrial fields such as automobiles, railways, construction, and industrial machinery, fluctuations in economic conditions, capital investment trends, and foreign exchange rates may affect business performance and financial condition. As countermeasures, the Group is diversifying its operations across multiple industries with differing economic cycles, expanding the MRO business, and hedging through forward foreign exchange contracts and other means.

As the Group operates globally, primarily in Asia, North America, and Europe, social unrest caused by terrorism, war, political changes, regulatory revisions, and similar events may affect product markets. The Group regularly monitors the political and social conditions at each business site and addresses this risk by holding regular Compliance Liaison Meetings and Security Trade Control Liaison Meetings.

The Group procures metal parts, electronic and electrical components, and other items from approximately 1,600 suppliers. If parts supply is disrupted due to natural disasters, cyberattacks, bankruptcy of suppliers, or other causes, product profit margins may deteriorate and opportunity losses may occur, affecting business performance and financial condition. The Group is working to eliminate dependence on specific supply sources by establishing a supply chain BCP framework, promoting resilience certification acquisition among suppliers, and promoting multi-sourcing.

Although the Group holds many products with high market share both domestically and internationally, delays in new product development or the development of groundbreaking new products by competitors could lead to a decline in market share, affecting business performance and financial condition. The Group is working on developing differentiated products utilizing its proprietary motion control technology and open innovation, and is accelerating its evolution toward smart motion control through electrification, systemization, and data utilization.

The Group holds personal and confidential information of customers and business partners, as well as confidential business and technical information. If information leakage or system outages occur due to cyberattacks, unauthorized access, virus infection, or other causes, production may be halted and trust may be undermined, affecting business performance and financial condition. The Group has established an "Information Security Committee" and is implementing continuous improvement through the introduction of security systems, vulnerability assessments, access controls, and regular internal and external audits.

If a third party infringes the Group's intellectual property rights or confidential information is leaked, or if the Group is accused by a third party of infringing their intellectual property rights, business performance and financial condition may be affected. The Group's intellectual property department works in collaboration with business divisions to protect patents, manage confidential information, investigate and eliminate counterfeit products, and has established an IP clearance framework starting from the product planning and development stages.

The Group strengthens its production, sales, and technology base through domestic and international mergers and acquisitions; however, if the initially expected effects of an acquisition are not achieved, impairment losses on goodwill and other fixed assets may occur, affecting business performance and financial condition. The Group has clarified its acquisition process through the establishment of Group M&A implementation standards, and conducts due diligence during the evaluation stage as well as post-acquisition operational verification.