YASKAWA Electric Corporation

Changes in international relations, such as US-China relations or the situation in Russia/Ukraine, could result in export controls, restrictions on technology transfer, tariff increases, and other measures that constrain development, production, logistics, and sales activities. The Group operates sales offices in 30 countries globally and has production sites in multiple countries including Japan and China, meaning the potential scope of impact on the business is broad. As countermeasures, the Group has established a system of regular monitoring through each site, rapid initial response via the Crisis Management Committee, and a control framework addressing legal and regulatory changes through the placement of compliance officers globally.

The Group procures steel and other raw materials and various components globally, but price surges, increased demand, changes in international relations, natural disasters affecting suppliers, or deterioration in suppliers' business conditions could make it difficult to continuously secure the required volumes. Disruption of the supply chain would directly affect product supply and could adversely affect business results and financial condition. As countermeasures, the Group is diversifying procurement sources, securing appropriate inventory levels, promoting local production and local procurement, formulating BCPs, and implementing early identification of at-risk components with corresponding design changes.

The Group conducts sales, procurement, and exports denominated in local currencies such as the US dollar, euro, Chinese renminbi, and Korean won, and foreign exchange fluctuations beyond expectations could reduce product competitiveness and adversely affect business results and financial condition. For FY2025 (ended February 2025), the sensitivity to a 1% change from actual exchange rates was approximately ¥1,380 million for the US dollar, approximately ¥730 million for the euro, approximately ¥1,130 million for the Chinese renminbi, and approximately ¥380 million for the Korean won in terms of revenue; and approximately ¥250 million for the US dollar, approximately ¥80 million for the euro, approximately ¥280 million for the Chinese renminbi, and approximately ¥160 million for the Korean won in terms of operating profit. As countermeasures, the Group is executing forward foreign exchange contracts and foreign exchange hedges, and working to build a profit structure resilient to exchange rate fluctuations through the promotion of local production and local procurement.

Strong competitors exist in each business field, and intensifying price competition, relative decline in product competitiveness, or delays in product launch timing could adversely affect business results and financial condition. Even in fields where the Group holds a high market share, maintaining competitive advantage into the future is not guaranteed. As countermeasures, the Group is working on solution differentiation and higher value-added offerings through i3-Mechatronics, strengthening cross-divisional Research & Development centered on the Yaskawa Technology Center, and shortening development lead times to enable timely market launches.

Policy and regulatory changes accompanying climate change countermeasures, such as the introduction of carbon taxes, emissions trading, and stricter emissions regulations (transition risk), could lead to increased costs for fuel and material procurement and for green power purchasing. Delayed response to changing societal demands could also affect corporate value. As countermeasures, the Group has endorsed the TCFD recommendations and disclosed related information, conducts monitoring through the Sustainability Committee chaired by the President, and implements PDCA management led by the Environmental Promotion Officer.

Addressing human rights issues such as forced labor and child labor is required not only of the company itself but across the entire supply chain, and human rights-related legislation is increasingly being introduced in various countries and regions. Failure to respond appropriately could result in legal violation risk and a decline in competitiveness due to loss of social trust. As countermeasures, the Group has explicitly stated respect for human rights in the Yaskawa Group Code of Conduct, conducts regular deliberation and monitoring through the Sustainability Committee, and promotes human rights due diligence and information disclosure targeting domestic Group employees and key business partners.

Server and system downtime or network failures caused by cyberattacks, unauthorized access, ransomware, or virus infections could disrupt business continuity and production capacity, and leaks of personal information or confidential information belonging to customers or business partners could lead to loss of market trust. Additional risks include privacy violations, copyright infringement, and confidential information leaks resulting from misuse of generative AI, as well as secondary damage risk arising from incidents at business partners. As countermeasures, the Group has established an information security framework and CSIRT structure led from the top of management, conducts global monitoring for cyberattacks, has established internal rules and e-learning training on the use of generative AI, and conducts visualization and regular verification of business partners' security measures.

Amid a global labor shortage and intensifying competition for highly specialized talent, delays in recruiting and developing personnel or the loss of talented employees could lead to a decline in the Group's competitiveness. Developing global talent capable of bridging cultural, customary, and language barriers, and establishing a sound working environment, have become increasingly important. As countermeasures, the Group is promoting human capital management, early selection and development of next-generation executive candidates, promotion of diversity and inclusion, and monitoring of employee engagement through ES surveys and direct dialogue with management.