NICHIDAI CORPORATION

Sales to automotive-related industries accounted for 71% of total net sales in the fiscal year under review, and changes in automakers' technology trends, production trends, new component development, standardization, and overseas local procurement directly affect the Company's business performance. Although the Company does not belong to any specific automaker's group, its sensitivity to industry-wide trends is high. As countermeasures, the Company is promoting the development of new products utilizing precision forging technology and the expansion of the Filter Business.

In fiscal 2025, the Company was highly dependent on a specific customer, the Mitsubishi Heavy Industries Group, which accounted for 26.9% of net sales. Significant fluctuations in the group's order intake, production trends, or outsourcing policies could have a material impact on the Company's business performance and financial condition. At present, no specific diversification measures are disclosed in the Annual Securities Report.

Domestic production facilities are concentrated in Kyoto Prefecture (Ujitawara Town and Kyotanabe City), and the overseas production facility is limited to a single site in Chonburi Province, Thailand. In the event of an unforeseen natural disaster or similar event, significant disruption to production could occur, potentially affecting business performance and financial condition. No specific countermeasures such as diversification of production sites are disclosed in the Annual Securities Report.

In the event of natural disasters such as earthquakes, storms, and floods, fires or other accidents, or social disruption caused by the spread of infectious diseases, human and physical damage and the suspension of business activities could affect business performance and financial condition. The Company Group promptly transitions to a crisis management structure based on its risk management regulations and manuals, and examines and implements countermeasures.

While the Company secures certain inventory levels of raw materials and components and procures from multiple suppliers, price surges or shortages due to changes in market conditions, or disasters or bankruptcies at suppliers, could disrupt procurement. If a procurement disruption occurs, it could affect business performance and financial condition through deterioration of product profit margins or suspension of production.

In an environment where cyberattacks, unauthorized access, and computer virus infections from external sources frequently occur, an information system failure could affect business performance. As countermeasures, the Company has established and operates