JANOME Corporation

The ratio of overseas sales to consolidated net sales has remained at around 70%, and since the majority of overseas sales are conducted in foreign currencies, exchange rate fluctuations directly affect business performance. Although the risk is mitigated through forward foreign exchange contracts and netting settlements between the Company and its subsidiaries, complete hedging remains difficult.

Changes in political systems, regulatory changes, natural disasters, wars, and terrorism in the various countries where production and sales activities are conducted pose a risk of making business continuity difficult. Currently, sales to Russia have been suspended due to the prolonged Russia-Ukraine situation, and the escalating tensions in the Middle East have affected sales across the entire Middle East region and neighboring countries, with the potential to disrupt factory utilization rates and production adjustments as well.

Increases in the costs of raw materials such as iron, aluminum, copper, and plastic (resin) may affect business performance. Global parts procurement is conducted through production sites in Japan, Taiwan, and Thailand, and the Production Control Division centrally manages domestic and overseas sites to stabilize and reduce costs, but the risk of fluctuations in raw material market conditions remains.

If a serious quality problem occurs in sewing machines or industrial equipment, recall costs and damage to brand image may affect business performance. A Product Liability (PL) Committee has been established to deliberate on safety on a monthly basis, and the Quality Assurance Department promotes quality audits and understanding of the quality status of domestic and overseas group companies.

Competition with rival companies continues in both the Household Products and Industrial Equipment businesses, posing a risk of deteriorating business performance if the market environment changes significantly. Development, manufacturing, and sales work together to improve the quality of products and services, but the possibility of price pressure and declining market share due to intensifying competition cannot be ruled out.

Some borrowings are subject to financial covenants, and if these covenants are breached, financial institutions may demand acceleration of the loans (loss of the benefit of time). This risk could have a material impact on cash flow in the event of deteriorating business performance or worsening financial indicators.

If impairment losses become necessary for tangible fixed assets, intangible fixed assets, investments, and other assets, this may affect business performance and financial condition. Impairment risk is likely to materialize when the profitability of assets declines due to business restructuring or changes in the market environment.

If a large-scale natural disaster occurs at a factory or other facility, damage to equipment and supply chain disruptions may lead to production stoppages and lost business opportunities. In addition, lockdowns caused by pandemics such as COVID-19 could disrupt business partners, supply chains, and logistics, resulting in lost sales, delayed product supply, and the risk of operational shutdowns due to mass infection among employees.

If a large volume of personal information, including customer information, is leaked, it may damage the Group's credibility and adversely affect business performance. Although internal management systems have been established through the formulation of the "Personal Information Protection Policy" and "Personal Information Management Regulations" and the establishment of a Personal Information Management Committee, the risk of leakage due to cyberattacks and other causes remains.

Retirement benefit obligations may increase if assumptions such as the discount rate change significantly, which may affect business performance and financial condition. In addition, deferred tax assets may decrease if there are significant changes in estimates of future taxable income or changes in tax laws, posing a risk of adversely affecting business performance.