PLACO CO.,LTD.

If procurement of plastic raw materials becomes difficult or prices surge or plunge due to political instability in oil-producing countries, international sanctions, transportation disruptions, or sudden changes in the crude oil supply-demand balance, this could cause users to refrain from new capital investment, potentially leading to a decline in net sales. Since this directly affects demand for the Group's core products, the Inflation Film Molding Machine and Blow Molding Machine, the impact on the business is significant. In response, the Group seeks to reduce this risk by improving customer satisfaction through appropriate and prompt maintenance and improvements for long-standing customers.

Due to production activities in Taiwan and other locations and imports from Germany and elsewhere, the Group is in a net import position. If sharp depreciation of the yen against the US dollar and euro cannot be passed on to product prices, this could lead to a decrease in orders received or a decline in profitability. Given the structural situation in which total imports exceed export amounts, foreign exchange risk is a constant presence. In response, the Group implements balance adjustments among yen-denominated, US dollar-denominated, and euro-denominated transactions, along with monitoring of foreign exchange gains and losses by the accounting department.

Since revenue recognition is based on the inspection and acceptance basis, if the scheduled inspection and acceptance date for large, high-value products falls just before the fiscal year-end, recognition of the related sales may be pushed into the following fiscal year, potentially significantly affecting the periodic earnings of both the current and following fiscal years. The impact is particularly pronounced when high-margin models are affected by such delays. In response, the Group promotes the leveling of product inspection and acceptance timing and works to reduce this risk through progress management and improvement directives at management meetings and department head meetings.

The Plastic Molding Machine Business outsources a substantial portion of production to external partners, and if cooperative relationships with these partners are impaired, smooth production of products may not be possible. There is also a risk that procurement could become impossible due to tensions between nations or the breakdown of cooperative relationships with partners, or that procurement could be delayed due to accidents or transportation disruptions during overseas shipping. In response, the Group works to reduce this risk through prior investigation of technical capabilities, supply capacity, and financial condition when selecting outsourcing partners, as well as through ongoing contract reviews and collaboration.

In the Plastic Molding Machine Business, which relies on proprietary technology, a concentration of retirements within a short period or personnel outflow due to labor market fluidity could make it difficult to pass on technical know-how over a certain period, potentially affecting business performance. In the IT & Staffing Business as well, if the recruitment and training of IT engineers and temporary staff does not proceed as planned, or if such personnel leave, this could lead to a decline in competitiveness and service levels. In response, top management is actively involved in recruitment activities, working to continuously secure excellent personnel and to develop them in a planned manner.

As discussions on strengthening waste plastic regulations become more active around the world, and development of alternative materials such as bioplastics and paper materials progresses, the Group's products need to adapt to environmental regulations related to the products manufactured by customers. It is expected that R&D expenditures and new capital investments will be needed to respond to this, and these costs may affect business performance. In response, the Group is focusing on developing film molding machines compatible with biodegradable resins and bioplastics, and on improving the molding efficiency of fully electric blow molding machines.

The staffing business within the IT & Staffing Business is subject to legal regulation under the Worker Dispatching Act and related laws and regulations, and if the Group falls under grounds for disqualification or violates laws or regulations, this could affect business performance. In addition, amendments to laws and regulations accompanying changes in social conditions may have an adverse impact on business operations. In response, the President's Office and the Internal Audit Office monitor and grasp the status of compliance with relevant laws and regulations, and provide countermeasures and instructions to relevant departments as necessary.

In the IT & Staffing Business, engineers and temporary staff engaged in product development, system development, and general clerical work for client companies handle a large amount of personal information and confidential information. If such information is leaked externally, whether intentionally or through negligence, this could result in issues of management responsibility, litigation, reputational damage, and the burden of substantial damages, potentially leading to a loss of social trust and deterioration in business performance. In response, the Group provides education and training on the handling of personal information and confidential information at the time of joining the company and on a periodic basis, and works to strengthen information management through internal audits.