RAIZNEXT Corporation

Plant maintenance for oil, petrochemical, general chemical, and other industries is the Company's core business, but the plant maintenance market is shrinking due to the closure of petroleum fuel-related plants and other factors, raising concerns about a decline in contract volume received. As countermeasures, the Company is promoting expansion of share among existing customers and development of new customers, but if the market contraction trend continues, the impact on operating results could be significant.

In the existing domains of major customers, capital expenditure is decreasing due to deteriorating product demand trends, raising concerns about a decline in contract volume received for the Engineering business (new construction and renovation work). The Company is addressing this by expanding into new domains such as large-scale equipment modification/renovation projects and carbon neutrality projects, but if the contraction of investment in existing domains continues, an impact on business performance is expected.

The majority of sales is generated from the oil and petrochemical industries, so changes in energy policy, declines in demand for petroleum products, industry restructuring, and equipment reorganization trends directly affect business performance and financial condition. Amid an expected future decline in demand for petroleum products, the Company aims to expand orders in new domains such as carbon neutrality projects and renewable energy facilities.

If the prices of materials and equipment used in plant maintenance and construction work rise sharply, there is a risk that profitability will decline because it becomes difficult to pass on the increased costs to contract amounts, particularly for long-duration projects, due to the time lag between the point of estimation/order receipt and the point of ordering from partner companies. The Company implements measures such as early ordering, securing diverse procurement sources, incorporating price surge clauses into contracts, and passing costs through to construction prices.

If there is a shortage of construction supervisors, workers, and other construction personnel, there is a risk of delays in periodic repair work and construction projects. In addition, rising wages for construction personnel may increase construction costs and worsen project profitability; the Company seeks to reduce these risks through strengthened collaboration with partner companies, passing costs through to construction prices, and stable and planned ordering.

If compliance with the Construction Business Act and other relevant laws and regulations as well as internal company rules is insufficient, the Company may become subject to administrative sanctions or litigation, which could affect its credibility, business performance, and financial condition. The Company has established a system that includes holding Compliance Committee meetings twice a year, conducting annual compliance status inspections, maintaining a compliance hotline system, and providing education and training on important laws and regulations.

Since April 2024, upper limit regulations on working hours have been applied to the construction industry, and failure to comply may result in penalties, damage to corporate trust, and an impact on business performance. Since fiscal 2020, the Company has established the "Overtime Work Management Guidelines" and is promoting measures such as increasing and appropriately allocating personnel, adjusting staffing for large-scale projects, and coordinating construction schedules with customers.

The Company holds confidential information such as customer and business partner information, personal information, and technical, sales, and management information, and if important information is leaked due to computer virus infection, unauthorized external access, targeted emails, cyberattacks, or other causes, it could affect business performance and financial condition. The Company strives to avoid and minimize such risks through the establishment of confidentiality rules, implementation of security measures, and regular education and targeted attack email drills.

If a serious accident such as an operational shutdown, explosion, or fire occurs at a plant where the Group was engaged in maintenance or construction work, and the Group is determined to be responsible, this could affect business performance due to liability for damages and the burden of plant restoration. The Company works to reduce the financial burden through a quality management system based on ISO9001, thorough compliance with various technical standards, establishment of an emergency response system based on crisis management regulations, and enrollment in various types of insurance.

If the Company is slow to utilize new technologies and digital technologies, productivity improvements may not be achieved, competitive advantage may be undermined, and business performance may be affected. The Company is promoting mechanization of various construction work and the introduction of process management systems using digital tools; it established the Digital Strategy Department in fiscal 2023, and from fiscal 2025 reorganized it into the DX Division to strengthen company-wide DX promotion.