MIMAKI ENGINEERING CO.,LTD.

Overseas markets account for approximately 70% of net sales, and the Company also conducts production in Asia (China, Taiwan) and Europe (Netherlands, Italy, Lithuania). As a result, deterioration in economic conditions in major overseas markets, changes in laws and tax systems in countries of operation, and geopolitical risks such as the Russia-Ukraine situation and the U.S.-China confrontation may affect business results. The Company is working to strengthen its global information gathering and management systems and risk management framework, as well as optimize its supply chain.

Because the ratio of overseas sales exceeds the ratio of overseas production, sharp fluctuations in foreign exchange rates directly affect business results and financial position. The Company addresses this through short-term hedging using derivatives managed by a dedicated foreign exchange management department, early collection of foreign-currency-denominated receivables, and medium-term improvement of its foreign currency position through promoting local production of consumables such as ink at the point of consumption.

In the industrial inkjet printer market, which is the Company's core business, entry by major companies and companies from emerging countries is increasing, and intensifying competition may lead to downward pressure on prices and a decline in market share, which could affect business results. The Company currently recognizes its advantages in technology and quality, and plans to respond through region-focused sales activities and the continuous launch of innovative new products.

For raw materials such as print heads, electrical components, mechanical components, and ink dyes, there is a possibility of difficulty procuring from current suppliers, price increases due to market conditions, and production difficulties or lost sales opportunities due to supply instability. The Company continues to work on reviewing suppliers with consideration of geopolitical risk, diversifying risk through securing multiple suppliers, and controlling costs through component commonization and part-count reduction at the design stage.

While new product development is a source of growth, if development does not proceed as planned, increases in research and development expenses for prototype materials and labor, as well as decreases in net sales due to development delays, may occur. The Company works on efficient new product development through the introduction of advanced and efficient development methods, internal accumulation of development technology know-how, and promotion of platform design.

Cyberattacks and information security vulnerabilities may result in loss of trust due to leakage of confidential information, business disruption and reduced customer service due to system outages, and financial damage or reputational harm to the Company. Led by the Management Information Systems Department, the Company works on formulating and thoroughly implementing security policies, rigorous information management, employee training, system backups and security enhancement, and monitoring and countermeasures against vulnerabilities.

If defects occur in in-house developed products, this may result in increased repair and compensation costs as well as delays in product development plans, potentially affecting business results and financial position. The Company has taken out product liability insurance and, treating quality improvement as a top management priority, is advancing it through a project-based structure, addressing issues across the design, manufacturing, and service departments.

The Company procures part of its capital expenditure and working capital funds through borrowings from financial institutions, and its interest-bearing debt dependency ratio stood at 28.8% at the end of the fiscal year under review. As a result, sharp fluctuations in interest rates may affect business results and financial position. The Accounting Department leads consideration of diverse fundraising methods, while the Company also strives to improve working capital efficiency through inventory optimization activities.

To grow as a development-oriented, global company, it is essential to continuously secure and develop product development personnel and globally capable personnel. A significant shortage of such personnel may affect business results and financial position. The Company works on actively securing core personnel based on its human capital strategy, promoting diversity (advancement of women and closing the gender gap), consideration for work-life balance, and enhancing its education systems.

A large-scale natural disaster or infectious disease outbreak in Tomi City, Nagano Prefecture, where the Company's head office, R&D facilities, and factories are concentrated, as well as abnormal weather such as typhoons and torrential rains associated with climate change, may disrupt the supply chain or halt operations, while stricter environmental regulations associated with decarbonization may increase response costs, potentially affecting business performance. The Company is advancing the formulation and enhancement of its Business Continuity Plan (BCP), promoting energy conservation and decarbonization initiatives, and analyzing the medium- to long-term impact of climate change on its business.