FUJI SEIKI CO.,LTD.

The Group produces and sells Precision Molds for Injection Molding and Molding Systems, precision molded products, etc. both domestically and internationally, and there is a risk that production and sales could contract if political turmoil or a severe economic downturn occurs in major production bases or markets. Due to its global business operations, the Group's structure is directly susceptible to geopolitical risks and economic fluctuations. No specific countermeasures are described, and if such risks materialize, they may have a significant impact on the Group's business results and financial position, etc.

Some precision molded products are sold mainly to specific customers, and there is a risk that a decline in sales for the Group could result if such a customer's business performance deteriorates, it withdraws from business, undertakes large-scale inventory or production adjustments, or demands substantial price reductions. Customer concentration risk is inherent, and the trends of specific customers are directly linked to business performance. The securities report does not describe specific countermeasures such as diversification.

The Group manages risk by recording an allowance for doubtful accounts based on past bad debt experience rates and by setting credit limits for each customer under credit management regulations. However, if a major customer defaults due to an economic downturn or other factors, bad debt losses substantially exceeding the allowance for doubtful accounts could occur, potentially having a significant impact on the Group's business results and financial position, etc. Although a credit management system has been established, there remains a risk that it may not fully address sudden changes in the macroeconomic environment.

The Group seeks to reduce risk through product liability insurance and production control based on quality control regulations, but it cannot guarantee that all products are free of defects, and the possibility of future defective products cannot be ruled out. If a serious product defect occurs, there is a risk of substantial damages and loss of credibility, and the possibility that the amount of damages could exceed what is covered by insurance cannot be denied. Because the Group handles high-precision products such as precision molds and precision molded products, quality issues could also affect the continuation of business relationships with customers.

The Group seeks to diversify risk by procuring the raw materials necessary for the production of Precision Molds for Injection Molding, precision molded products, etc. from multiple suppliers, but there is a possibility that it may not be able to secure necessary raw materials due to circumstances at suppliers. In addition, if purchase prices surge due to rising crude oil prices or fluctuations in supply-demand balance, production contraction or cost increases could occur, potentially having a significant impact on the Group's business results and financial position, etc. There is also an inherent risk that profitability could deteriorate if increases in raw material costs cannot be passed on to selling prices.

The Group seeks to differentiate itself through high-functionality products based on core precision mold technology, but unlike general consumer goods, molds are difficult to identify infringement of even when imitated, and the Group may not be able to prevent third parties from producing and selling similar products. There is also a risk that the results of the Group's own product and technology development could be alleged to infringe on the patents or intellectual property rights of other companies. If these risks materialize, they could result in decreased sales and payment of damages, potentially having a significant impact on the Group's business results and financial position, etc.

The Group is subject to various public regulations, including business licenses and permits, taxation, and environmental regulations, at its domestic and overseas business locations. If environmental regulations are tightened or power restrictions are implemented at major business locations, production activities could be significantly constrained, and the Group could be forced to incur substantial capital expenditures or costs to comply with regulations. Because the Group conducts business globally, it is necessary to continuously monitor regulatory developments in each country and region.

The Group's business includes a considerable degree of product sales and production in various overseas regions, and there is a risk that significant fluctuations in exchange rates could lead to a decrease in yen-converted sales, increased costs, and reduced price competitiveness. In addition, valuation gains or losses may arise from the revaluation of receivables and payables at the exchange rate prevailing on the fiscal year-end date, potentially having a significant impact on the Group's business results and financial position, etc. Because overseas business accounts for a large proportion of operations, the impact of exchange rate fluctuations on business performance is relatively large.

The Group relies on borrowings from financial institutions for fundraising and is exposed to interest rate fluctuation risk. Although measures have been taken to avoid interest rate fluctuation risk, if the current low interest rate levels rise significantly, a substantial increase in interest expense is expected, which could have a significant impact on the Group's business results and financial position, etc. As long as the fundraising structure remains dependent on borrowings, the risk of increased financial burden during periods of rising interest rates will continue.

The Group conducts production and sales activities at various locations both in Japan and overseas, and while it strives to reduce risk through thorough safety and disaster prevention management as well as hygiene management and infection prevention, there is a possibility that production activities at factories and other facilities could be significantly disrupted by large-scale natural disasters such as earthquakes or storm and flood damage, fires, or the spread of infectious diseases. While the Group's global business operations spanning multiple locations diversify the risk of a disaster affecting a specific site, there is also an inherent risk that a widespread infectious disease outbreak could affect all sites simultaneously. If these risks materialize, they could have a significant impact on the Group's business results and financial position, etc.