YUKEN KOGYO CO., LTD.

There is a risk that maintaining price competitiveness and product superiority will become difficult due to requests for price reductions both domestically and overseas, as well as the emergence of competitors from emerging countries. This could have a significant impact on business results, etc. As a countermeasure, the Group is strengthening the development of globally specified products and improving delivery capabilities to avoid simple price competition.

The ratio of overseas sales in FY2026 (ending March 2026) is high at 61.3%, and sharp fluctuations in exchange rates may affect business results, etc. Although the Group hedges risks through forward exchange contracts and other means for foreign currency-denominated transactions, there remains a risk that it will not be able to fully respond to sudden fluctuations.

As the Group actively promotes the establishment of overseas subsidiaries, there are risks such as deteriorating employment conditions and unpredictable legal, political, economic, and social disruptions caused by local governments. If these risks materialize, they may affect business results, etc.

Supply disruptions caused by accidents, disasters, or bankruptcies of suppliers, as well as rising procurement costs due to surging raw material prices, may have a significant impact on stable production and business results, etc. As countermeasures, the Group is strengthening communication with major suppliers, conducting quality audits, selecting optimal suppliers by leveraging the global supply chain, and implementing price pass-through at appropriate timing.

If an unexpected product defect causes damage to customers or third parties, the Group may bear liability for damages that cannot be fully covered by the comprehensive insurance subscribed to by the entire Group. In addition, there is a risk that loss of credibility could have a significant impact on business results, etc. The Group has established a quality and environmental management system certified under ISO standards and continuously works to improve quality.

Leakage of confidential technical or business information and personal information, as well as destruction, tampering, leakage of information, or suspension of internal systems due to cyberattacks exceeding anticipated defense levels, may have a significant impact on business results, etc. The Group has taken measures such as developing internal regulations, raising employee awareness through security education, and implementing measures to prevent external intrusion; however, it is difficult to fully respond to unforeseen circumstances.

The occurrence of large-scale earthquakes, natural disasters, fires, infectious diseases, etc. may cause human and physical damage to Group companies, and operational suspensions may hinder the supply of products to customers. Since the Group operates globally, there is a risk that multiple sites both in Japan and overseas could be affected, which may have a significant impact on business results, etc.

In addition to the risk that securing excellent human resources will become difficult due to the declining birthrate and aging population in Japan, if human resource development does not progress both domestically and overseas and employees fail to acquire the necessary skills and experience, business operations may be affected. As countermeasures, the Group is working to improve appeal to job seekers by improving treatment and realizing diverse working styles, as well as promoting hierarchical education, on-the-job training, compliance education, and the activation of personnel exchange within the Group.