KAWATA MFG.CO.,LTD.

The core business, the plastic product manufacturing equipment business, has a high proportion of sales from high-function rationalization equipment for the automotive and electronic components industries. If capital investment in the domestic and overseas plastic molding processing industry declines due to economic conditions, or if the company fails to respond to technological innovation and changes in the business environment, this could affect business performance. The company addresses this by continuing to focus on developing and expanding new sales fields and developing new products and technologies.

The company uses raw materials affected by market fluctuations such as steel, as well as petroleum-derived chemical materials. If price increases exceed various cost reduction measures and cannot be sufficiently passed on through pricing, profit margins could decline. Regarding crude oil issues arising from the deterioration of the situation in the Middle East, the company strives for stable supply through diversification of procurement sources and securing inventory, but if a global supply disruption or severe shortage occurs, it may be forced to halt production activities or delay product supply.

The plastic molding processing industry, the company's primary customer base, is engaged in fierce technological innovation and quality/price competition both domestically and internationally, with increasingly stringent demands regarding capital investment. If price competition exceeds expectations, profit margins could decline. The company addresses this by developing high-value-added products and strengthening competitiveness in terms of quality, delivery time, and price.

In FY2026 (ending March 2026), overseas sales accounted for 40.1% of total sales, with the importance of East Asia (China, Taiwan, etc.) increasing. If unexpected events occur in these overseas regions, such as political turmoil, unilateral revisions to laws, changes in economic conditions, or religious issues, this could adversely affect production and sales activities. The company is working to strengthen its production bases in East Asia and Southeast Asia, as well as its sales and service bases including North & Central America.

The company conducts overseas production in China and Indonesia, and fluctuations in the value of the Chinese yuan and Indonesian rupiah may affect the foreign currency-denominated selling and purchase prices of each manufacturing subsidiary. The company strives to hedge risk through foreign exchange forward contracts and other means, but if there are sudden exchange rate fluctuations, foreign exchange gains or losses exceeding expectations may occur. In addition, fluctuations in the yen conversion rate used when preparing consolidated financial statements may also affect profit/loss and financial condition.

The development and success of the business depends on securing and developing human resources. In particular, overseas subsidiaries require securing and developing personnel with strong leadership and communication skills in addition to practical capabilities. If the company fails to secure and develop such personnel, it could affect its medium- to long-term business strategy.

Lawsuits may be filed against the company, or the company may file lawsuits, regarding intellectual property, product liability, environmental conservation, labor issues, and other matters. Depending on the developments, this could adversely affect profit/loss, financial condition, and social credibility.

If a natural disaster such as an earthquake or typhoon, or an accident such as a fire occurs, or if a serious infectious disease spreads, this could directly or indirectly affect production and sales activities, potentially worsening profit/loss and financial condition.

In addition to damage to production facilities and impacts on raw material procurement caused by large-scale disasters resulting from climate change, if costs related to raw materials and energy rise due to tightening regulations and institutional changes concerning climate change in countries around the world, this could directly or indirectly affect production and sales activities, potentially worsening profit/loss and financial condition.