CKD Corporation

If a prolonged economic downturn leads to sluggish market conditions in the industries to which major customers belong, this may affect the business performance of the Group. In response, the Group is taking prompt action to capture changes in the market environment, while leveraging foreign exchange hedging and diversifying procurement and production bases to level out risk.

If heightened trade friction and geopolitical risk give rise to import/export restrictions or constraints on semiconductor-related transactions, this may affect production activities and business performance, particularly in the Components Division. In response, the Group is promoting local procurement with geopolitical risk in mind, establishing production systems across multiple locations, and distributing inventory centers.

If a cyberattack or information leakage causes malfunction of internal systems, leakage of confidential information, or shutdown of production lines or logistics systems, this may result in delayed deliveries to business partners and a decline in social credibility. In response, the Group is developing information security management policies and rules, conducting employee training and internal audits, and introducing and updating the latest security equipment and software.

Delays in business and product development aimed at realizing a decarbonized society, as well as tightening of greenhouse gas emission regulations, the Energy Conservation Act, and regulations on chemical substances used, may affect business activities. In addition, a delayed response to the global trend toward reducing plastic use poses a risk to the continuity of the packaging machinery business. In response, the Group is advancing the development of products that reduce environmental impact, promptly switching to parts that do not contain regulated substances, and developing packaging machinery that supports plastic-reduced packaging materials.

If a product causes personal injury or property damage, this may result in the burden of damage compensation and a decline in customer trust. In response, the Group is strengthening its quality assurance system covering everything from raw materials to shipping inspection, and views the increasing number of quality-conscious customers as an opportunity through growing demand for high-value-added products.

Commoditization of certain products may intensify price competition with competitors and reduce profitability. In response, the Group is promoting the development of IoT-related equipment and preventive-maintenance, long-life products, as well as developing high-value-added products and deploying price-competitive offerings.

A shortage of global talent and personnel with strong planning and proposal capabilities may affect new business development and global activities, while employee overwork, stress, and workplace accidents may hinder production activities. In response, the Group is strengthening internal education, including implementing global talent development plans, conducting regular mental health checks, and providing occupational health and safety training.

Insufficient management systems at recently established or smaller overseas locations may result in unexpected losses or an adverse impact on business performance. In response, the Group is continuously reviewing management strategy and managing annual policies, strengthening governance at overseas group companies, and implementing global talent development plans.

In addition to the impact on production activities from damage to or failure of production equipment, difficulty securing domestic labor due to the declining birthrate may hinder production activities. In response, the Group is maintaining equipment through regular renewal and maintenance, and is building a production system that does not rely on human labor by promoting automation at domestic plants, viewing the growing demand for labor-saving solutions as an opportunity.

If deteriorating market conditions lead to a longer inventory turnover period, a significant valuation loss may be recorded, affecting business performance. In addition, in the Automatic Machinery Division, delays in customer acceptance inspections due to customer circumstances or technical factors pose a risk of delayed revenue recognition. In response, the Group is working to secure inventory in line with market needs and to reduce the risk of inventory stagnation by responding promptly to customer requirements.