KOMORI CORPORATION

Due to the penetration of the internet and e-books, demand for books and commercial printing is contracting, mainly in Europe, the U.S., and Japan, and sales of Offset Sheet-fed Printing Press (for Commercial Printing) are declining. If the spread of electronic media expands globally, including in emerging countries, this could adversely affect the performance of the offset business. As countermeasures, the company is promoting a focus on the package printing market, reviewing product positioning centered on ROI, and launching differentiated products.

At local subsidiaries in Europe and the U.S., demand for the core Offset Sheet-fed Printing Press (for Commercial Printing) is on a declining trend due to the increase in electronic media, raising the risk of weakening profitability. Printing companies are required to strengthen cost competitiveness, necessitating responses to labor-saving and skill-free operation. As countermeasures, the company is working to capture replacement demand, promote parts and maintenance services, and increase recurring income through process optimization solutions utilizing KP-Connect (Smart Factory Platform) and DPS.

In addition to unpredictable external factors such as riots, civil unrest, terrorism, war, natural disasters, and infectious diseases, U.S. tariff measures (so-called Trump tariffs) and stricter import/export regulations may cause changes in the cost structure of procurement and sales activities, as well as market access restrictions. Rising geopolitical tensions, particularly in the Middle East, may also affect the stability of the supply chain through crude oil price fluctuations and delays or cost increases in maritime transport. As countermeasures, the company formulates company-wide response policies, conducts regular market research and risk assessments, and analyzes the impact on its medium-term plan.

Procurement costs remain elevated against a backdrop of international conditions, exchange rate fluctuations, and rising logistics costs, which could affect product pricing and profitability. Geopolitical tensions in the Middle East and other factors may cause delays in maritime transport and instability in the supply of raw materials, creating a risk of delays in procuring parts and materials, which could affect production and delivery times. As countermeasures, the company is working on diversifying and reviewing procurement sources, reviewing inventory management, developing new suppliers, and promoting energy-saving measures.

If product quality claims arising from manufacturing, sales, or service occur, this could result in losses from repairs or damage compensation, as well as damage to the brand. As countermeasures, the company implements perceived quality management (comprehensive product quality management, customer response quality management, and appearance quality management) centered on "brand management," and has established a quality assurance system from the customer's perspective. It is also strengthening its rapid response system for service cases using a global CRM.

If information security is breached and damage such as information leakage, data destruction, tampering, or business suspension occurs, this could not only affect business performance but also lead to loss of trust. As countermeasures, the company has established information security standards, set up an information security committee, and built and maintains a security system that includes domestic and overseas group companies. It also implements preventive measures such as regular vulnerability diagnoses, risk assessments, and email drill training and education for employees.

Although mass production deployment of the next-generation B2 sheet-fed UV inkjet printing press, Digital Printing Press (J-throne 29), has begun, expected growth may not be achieved due to market takeoff conditions, customer investment trends, and the development of next-generation machines and new entries by competitors. Approximately 10 years have passed since the emergence of the B2 size market, and the competitive environment has intensified, making market penetration expansion a challenge. Regarding "Impremia IS29," a jointly developed machine with Konica Minolta, the company continues to promote the development of next-generation products while overcoming technical challenges.

In the Printed Electronics (PE) business, technological innovation in target development fields can cause profitable fields to rapidly contract or new fields to rapidly emerge, creating an environment of constant change. If new market development takes time, there is a risk that business profitability could decline significantly. As countermeasures, the company is thoroughly conducting market research and strengthening its commercialization functions through its business promotion structure. It has also concluded a comprehensive collaboration agreement with Yamagata University to promote innovation in next-generation printed electronics.

Since overseas sales account for more than 70% of total sales and the main transaction currencies are the dollar and euro, a sharp appreciation of the yen could reduce sales and profits. As countermeasures, the company implements natural hedging through overseas procurement of raw materials and parts and overseas production of some products, prioritizes yen-denominated contracts, and hedges through forward foreign exchange contracts; however, significant fluctuations could adversely affect its financial position and business results.

The company has recorded goodwill in connection with corporate acquisitions aimed at expanding market share in emerging markets and enhancing products and services in the package printing field. If the acquired businesses continue to underperform relative to plan, this could result in goodwill impairment losses, adversely affecting the company's financial position and business results. As countermeasures, at the time of corporate acquisitions, the Board of Directors thoroughly deliberates on corporate value valuation, expected recovery of invested funds, the appropriateness of the acquisition price, and risks before making decisions. After acquisition, the company strives to reduce risk by establishing management and business promotion systems through the dispatch of seconded staff and strengthened collaboration.