PULSTEC INDUSTRIAL CO.,LTD.

The Group's core products are inspection and evaluation equipment for research and development, quality control, and production departments, and if business conditions in the industry or customers' capital expenditure trends deteriorate, this could adversely affect performance. In addition, there is a risk that the market size could shrink if competitors introduce similar or lower-priced products, or if customers shift toward in-house manufacturing. While these products offer high added value and high profitability, they also have characteristics that make them susceptible to demand fluctuations.

The Group is actively working to create new businesses and enter new markets, but since it takes a certain period of time to achieve stable profitability, this may reduce overall profit margins. There is a risk that discrepancies may arise between initial plans and actual results due to low product recognition in new markets and unfamiliarity with industry customs and business practices. Depending on changes in market conditions and customer trends, this could lead to a need to revise profit plans or difficulty in recovering invested capital.

While the Group actively allocates management resources to in-house product development, there is no guarantee that newly developed products will necessarily contribute to business results. Contract development is highly difficult, and there are cases where the actual man-hours required significantly exceed initial estimates, which may necessitate major revisions to profit plans or force a reduction or discontinuation of the business scale. If these risks materialize, they may adversely affect business performance.

Electronic components and precision mechanical parts are procured from trading companies and manufacturers, and if excess demand leads to shortages of raw materials or labor, stable supply may become difficult even with multiple purchasing routes. Custom-made parts such as molded products and metal-processed components are outsourced to processing subcontractors, but there is a risk that stable procurement may become difficult when the overall capacity utilization rate of subcontractors rises. If procurement cannot proceed as planned, production and delivery delays may occur, potentially undermining customer trust.

As the head office plant is located in Hamamatsu City, Shizuoka Prefecture, a large-scale earthquake such as a Tokai earthquake could significantly affect business activities. In addition to damage to the head office plant from localized heavy rain, typhoons, or large-scale power and water outages, there are also concerns about the impact on employees' living infrastructure. Although evacuation drills, safety measures, and asset protection measures are in place, there is a risk that business activities could be disrupted if recovery takes a long time.

The Group operates globally with sales and maintenance bases in Asia, North America, and Europe, but political and economic turmoil in each country, as well as the establishment or amendment of laws and regulations, could result in disadvantages to the Group. There are also inherent risks of security deterioration due to terrorism or war, and the outbreak of infectious diseases or epidemics, and if these risks materialize, stable product supply may become difficult. Responding to rapid environmental changes in overseas markets remains an ongoing challenge.

As the average age of employees rises overall, imbalances in age and personnel composition have become pronounced, and if new graduate hiring is expanded, fixed costs such as personnel expenses will increase first, potentially adversely affecting performance for a certain period. As labor shortages become severe at many companies, securing personnel who can perform immediately has become a major challenge. Although the Group addresses this through measures such as re-employing retirees, there are concerns about adverse effects on performance if stable labor force cannot be secured.