Taihei Machinery Works,Limited

If unexpected defects or malfunctions occur in the design, manufacturing, or installation of Plywood Machinery and Woodworking Machinery, repair costs and damage compensation may arise. In addition to substantial handling costs, the risk exists that lost business opportunities due to reduced credibility could adversely affect operating results and financial condition. The Company addresses this through attention to legal compliance, safety management, and quality control, but complete elimination is difficult.

In the manufacturing of Plywood Machinery and Woodworking Machinery, the Company depends on suppliers for parts, materials, and cooperating contractor services. Rising crude oil and raw material prices, as well as increased service unit prices due to labor shortages, could squeeze profits through increased manufacturing costs. Some parts have a high degree of dependence on specific suppliers, and the circumstances of such suppliers could adversely affect delivery times. As a countermeasure, the Company has built a cooperative framework through the Kyosokai and Kyoseikai, organizations composed of major suppliers, and shares information on parts supply conditions.

Due to business expansion into North America and Southeast Asia, the Company may be affected by foreign exchange fluctuations, and sharp fluctuations pose a risk of affecting customers' own capital investment plans. Overseas transactions are basically conducted in yen-denominated contracts, and when foreign currency-denominated contracts arise, the Company seeks to avoid risk by utilizing forward exchange contracts and derivative transactions. However, depending on exchange rate and interest rate conditions at fiscal year-end, valuation gains or losses on derivatives may affect ordinary profit and profit attributable to owners of parent. The Company also manages outlooks, such as by sharing information with customers to use as a reference for assumed rates.

The Company positions human resources as a source of value creation, as wood processing machinery technology is passed down through employees. However, difficulty in securing personnel due to the declining working-age population, or personnel shortages due to outflow to outside the company, could adversely affect business activities and performance. The Company addresses this through employee development, workplace environment improvement, and cultivation of corporate culture, but the structural labor shortage remains a continuing risk factor.

The Company's main production sites are concentrated in Aichi Prefecture, Osaka Prefecture, and Gifu Prefecture, and production sites could be adversely affected in the event of a large-scale disaster such as an earthquake originating in the Nankai Trough. The Company is strengthening business continuity measures through enhanced seismic resistance of production sites and the introduction of solar power generation systems, but the risk of geographic concentration remains.