Takatori Corporation

A sharp rise in the prices of key materials such as steel, aluminum, and resin could affect business performance. Rising raw material costs directly squeeze product margins, raising concerns about the impact on profitability. The Group is working to stabilize procurement costs by establishing a purchasing structure that relies on multiple suppliers.

For certain materials, including semiconductors, there is a risk of supply shortages due to concentrated demand or supply disruptions caused by disasters or accidents affecting suppliers. If materials become difficult to obtain over an extended period, production could become unstable, adversely affecting business performance. The Group is addressing this by establishing a purchasing structure that relies on multiple suppliers, but there are limits to how effectively this can respond to prolonged supply interruptions.

The Electronic Equipment Business market to which the Group belongs is significantly affected not only by general economic downturns but also by capital expenditure trends and supply-demand conditions in the electronic components industry. Fluctuations in the market environment could reduce orders received and net sales, adversely affecting business performance, and the Group has repeatedly been affected by such conditions in the past. Although the Group strives to build a stable profit-generating structure, it is difficult to completely eliminate the risk of market fluctuations.

There is a risk that the Group's orders received and net sales will fluctuate significantly and cyclically due to the semiconductor market's characteristic "semiconductor market cycle." The Group has repeatedly been affected by this cycle in the past, and during economic downturns, a sharp decline in capital expenditure could directly impact business performance. The Group strives to build a stable profit-generating structure, but it cannot control the cycle itself.

There is a risk that the Group's business performance will be affected by the characteristic cycle known as the "business cycle of the LCD market." During phases when LCD panel manufacturers scale back capital expenditure, orders for related equipment could decline significantly. The Group has repeatedly been affected by this in the past, and responding to fluctuations in the market environment remains an ongoing challenge.

Severe price competition continues in the Electronic Equipment Business market, and there is a risk that intensifying competition could cause selling prices to decline, worsening profitability. The Group is countering this through strengthened development of high-value-added products and collaboration with materials manufacturers and peripheral equipment manufacturers, but if price competition continues to intensify, an adverse impact on business performance is unavoidable.

The Electronic Equipment Business market requires responsiveness to innovative technological advances, and there is a risk that technological innovation could render the Group's existing products obsolete. In addition, if the timing of new product launches lags behind competitors, the Group could lose market share. The Group is addressing this through strengthened development of high-value-added products and collaboration with external manufacturers, but there are concerns that its response may not keep pace depending on the speed of technological change.

Natural disasters and geopolitical risks such as wars and terrorism in various regions of the world could affect the conduct of business. These risks are difficult to predict or control, and could adversely affect business performance through supply chain disruptions or sharp declines in demand. The Group makes accounting estimates, such as for the recoverability of deferred tax assets, on the assumption that the impact on business performance will be limited.

The spread of infectious diseases and changes in laws and regulations or government policy could affect the conduct of business. Tighter regulations or operational restrictions due to infectious diseases could constrain production and sales activities, adversely affecting business performance. While recognizing these risks, the Group makes accounting estimates on the assumption that the impact on business performance will be limited.

The loss of key personnel could adversely affect the Group's business performance. Personnel with specialized technical skills and knowledge in the development, manufacturing, and sales of electronic component manufacturing equipment are fundamental to business continuity, and their loss poses a risk of diminishing technological capabilities and customer service capacity. The securities report does not describe specific countermeasures, and details of risk management are not disclosed.