AIRMAN CORPORATION

Product demand is affected by fluctuations in construction investment, private-sector capital investment, and other factors. If the Group is unable to respond in time to sudden and unexpected changes in economic conditions, its business performance may be adversely affected. As countermeasures, the Group seeks to diversify demand through expansion of sales regions and introduction of new products, and responds sequentially to demand fluctuations based on information from both inside and outside the company.

The overseas sales ratio has reached 44.8%, and transactions with North America and Europe are denominated in US dollars and euros, directly exposing the Group to exchange rate fluctuations. Exchange rate fluctuations also arise when translating the income and expenses of overseas local subsidiaries into yen, and fluctuations exceeding expectations may affect business performance. As countermeasures, the Group considers risk hedging through forward exchange contracts, and the Accounting Section of the Accounting and Finance Group within the Administration Department tracks the impact amount by currency and by month and reports it to the Board of Directors.

The Group uses large amounts of raw materials such as iron, copper, and crude oil in product manufacturing, and procurement costs fluctuate with market conditions. Price fluctuations beyond the range that the Group can absorb may affect business performance. As countermeasures, the Group strives to absorb raw material price fluctuations through productivity improvements and reviews of sales prices.

Products are subject to public standards and regulations on safety and the environment, as well as import/export regulations and tax systems, in each country. If unexpected new regulations are established, this may hinder product compliance and business operations and affect business performance. As countermeasures, the Group is strengthening information gathering while building a business structure capable of responding quickly.

If an unexpected product defect gives rise to a product liability incident, damages that cannot be covered by product liability insurance may occur, affecting business performance. In addition to complying with public standards and regulations, the Group develops and manufactures products in accordance with strict internal quality standards and works to improve safety and reliability.

If a production site (Tsubame City, Niigata Prefecture) or a supplier is affected by a natural disaster such as an earthquake or flood, or by war, terrorism, an accident, or the like, this may disrupt raw material procurement and production activities and affect business performance. Processing of raw materials and supply of parts are sourced from various locations in Japan and overseas, and the Group is strengthening its BCP (Business Continuity Plan) to minimize the impact on production from supply chain disruptions.