YAMADA CORPORATION

Diaphragm pumps and automotive products are significantly affected by domestic and overseas economic trends and capital expenditure trends. Various risk factors also exist due to economic conditions in specific countries or regions, and changes in the economic environment may have a material impact on business performance. Given the high dependence on specific products, a significant decline in sales and profit is a concern during economic downturns.

As part of its growth strategy, the Company is promoting overseas business expansion, which exposes it to a variety of risks including global economic and foreign exchange trends, legal regulations, business customs, labor relations, and wars/conflicts. Although local group companies and the parent organization are working together to improve the management framework, if such risks materialize in an unforeseen manner, it may have a material impact on business and performance.

The Company holds sales, assets, and liabilities denominated in foreign currencies, and sharp fluctuations in exchange rates may have a material impact on sales, profit/loss, and financial position through yen conversion in the financial statements. As the proportion of foreign currency-denominated transactions increases with overseas business expansion, the impact of exchange rate fluctuations is structurally amplified.

The Company manufactures and sells products domestically and overseas under globally recognized quality control standards, but there is no guarantee that defects will not occur in all products. Although the Company has product liability insurance, if a serious quality issue arises, damages that cannot be fully covered by insurance may occur, which may have a material impact on business performance.

The Company holds financial assets and liabilities subject to interest rate fluctuation risk, and interest rate movements beyond expectations affect interest income, interest expense, and the value of financial assets. Rising interest rates may increase borrowing costs, while falling interest rates may reduce investment income, either of which may have a material impact on business performance.

The Company holds investment securities, and a decline in valuation due to stock market fluctuations or other factors may have a material impact on business performance. In times of deteriorating market conditions, the recognition of valuation losses is unavoidable, raising concerns about the impact on net assets and profit/loss.

The Company makes strategic investments in growth areas as well as capital expenditures for rationalization and renewal, but if group business expansion does not proceed as planned or if country risk in overseas operations materializes, an increased depreciation burden or a prolonged investment recovery period may result, which may have a material impact on business performance.

The Company holds confidential and personal information both within the group and from business partners, and if information leakage or tampering occurs due to negligence, theft, unauthorized access, or other causes, it may result in a loss of social credibility and compensation costs, as well as a material impact on the production system. Since July 2025, the Company has been strengthening information security measures against cyberattacks and updating its BCP (business continuity plan).

The Company has business sites both domestically and overseas, and while it strives to ensure disaster prevention and business continuity against accidents such as natural disasters and fires, as well as the outbreak of infectious diseases, if events significantly exceeding expectations occur, it may have a material impact on business performance. Although measures such as distributing operations across multiple sites have been implemented, the risk of supply chain disruption during large-scale disasters remains.

If it is determined that the book value of fixed assets held cannot be recovered through future cash flows, it becomes necessary to recognize an impairment loss by writing down the assets to their recoverable amount. If deterioration in the business environment coincides with underperformance of overseas investments, there is a risk that a substantial impairment loss could temporarily and significantly depress business performance.