Chino Corporation

Domestic manufacturing customers account for a large portion of net sales, with a high proportion of sales from products related to capital expenditure and research and development. If domestic manufacturers' capital expenditure declines significantly due to an economic downturn, this could adversely affect business performance. The high ratio of domestic sales is a structural factor that heightens sensitivity to economic conditions.

The medium-term management plan targets expansion of overseas sales, and the Company is affected by foreign exchange fluctuations through export transactions and the yen conversion of financial statements of overseas consolidated subsidiaries. Although transactions are conducted in yen in principle and hedged through forward foreign exchange contracts and other means, a significant appreciation of the yen could reduce price competitiveness and adversely affect consolidated business performance.

The Group conducts overseas activities such as production and sales primarily in Asia, including China, and faces risks that business activities may be constrained by deteriorating political and economic conditions, changes in laws, tax systems, and trade policies, or the occurrence of terrorism or conflict in various regions. If such events occur, they could adversely affect the Group's overall business performance through a slowdown in overseas operations.

Electrical and electronic components, semiconductors, metals, plastics, and other materials are used in product manufacturing, and there is a risk that supply tightness or delays could lead to production stoppages. Although the Company addresses this through securing multiple suppliers and considering alternative materials, if supply shortages or price fluctuations occur, this could adversely affect business performance.

The Company is exposed to competition with other companies in terms of quality, performance, and price in fields such as Measurement & Control Equipment, Instrumentation Systems, and Temperature Sensors. If profitability is squeezed by intensifying competition, this could adversely affect the Group's overall business performance. The measurement, control, and monitoring technologies cultivated over many years form the basis of the Company's competitive advantage.

The Company provides products to customers in a wide range of industries in Japan and overseas, and strives to maintain quality through product evaluation testing, design reviews, pre-shipment inspections, and other measures. If a significant quality issue occurs, this could adversely affect business performance through response costs, damages paid to customers, and a decline in sales due to reduced brand strength.

The Company holds confidential information and personal information in the course of its business activities and implements security measures; however, there is a risk that information leakage, loss or falsification of important data, or system outages could occur due to unauthorized external access or computer virus infection. If such events occur, they could adversely affect business performance through a decline in social credibility.

Various measures are implemented to secure and develop the human resources responsible for business activities; however, if the necessary human resources cannot be sufficiently secured or developed due to changes in the business environment or other factors, business activities may be hindered. The Company promotes initiatives based on its human rights policy, but if forced labor, harassment, or similar issues occur, this could also entail a decline in social credibility and litigation risk.

The Company has established a business continuity plan (BCP) anticipating large-scale earthquakes, typhoons, and other natural disasters; however, if unforeseen natural disasters cause damage to production facilities, this could result in the suspension of factory operations and disruption of supply to customers. Physical damage to production sites poses a risk directly linked to short-term deterioration in business performance.

The Company regularly checks the creditworthiness of business partners to prevent the occurrence of bad debts; however, if a business partner's financial condition deteriorates significantly, the collection of accounts receivable may be delayed, which could have a material impact on business performance. Since the risk of deterioration in business partners' financial conditions increases during economic downturns, continued strengthening of credit management is required.