JEOL Ltd.

With overseas sales accounting for approximately 70% of consolidated net sales, the Group is susceptible to economic fluctuations in the United States, Europe, China, and Southeast Asia. There is a risk that unforeseen changes in laws and regulations, export control regulations and economic friction arising from security concerns, and social disruption caused by terrorism or war may restrict business activities. Overseas subsidiaries strive for cooperation and mutual trust with local communities, but if these risks materialize, they may adversely affect the Group's business results and financial position.

Since approximately 70% of consolidated net sales are generated overseas, fluctuations in foreign exchange rates directly affect business performance. The Group implements hedging transactions, primarily forward exchange contracts, as necessary, but mid- to long-term exchange rate fluctuations cannot be fully absorbed by hedging. In particular, in a yen appreciation phase, the yen-converted amount of overseas sales decreases, which may affect the Group's business results and financial position.

To maintain global competitiveness in state-of-the-art equipment such as electron microscopes, continuous launch of new products into the market is essential, and future corporate growth depends largely on the outcomes of new product development. In the development of large-scale equipment, there is a risk that sufficient demand may not be secured despite substantial expenditure, and there is also a possibility that securing and developing the human resources necessary for product development may become difficult. If these risks materialize, they may adversely affect corporate growth and business results.

The Group holds confidential information such as technical information and customer information, and there is a risk of information leakage or system outages due to cyberattacks, human factors, or disasters. Countermeasures are being implemented through the establishment of an Information Security Committee, formulation of an information security policy, regular training, and cyberattack drill emails, but if an incident occurs, it may affect business performance through business suspension or leakage of confidential information.

There is a risk that the supply chain may be significantly affected by social disruption such as natural disasters, war, or terrorism, and that shortages of materials and price increases may occur due to rising demand. The Group strives for stable procurement by selecting reliable suppliers, but if these risks materialize, they may adversely affect the Group's business results and financial position through stagnation in production activities and increased procurement costs.

In the event of a large-scale natural disaster such as a major earthquake or a sudden accident such as a fire, production facilities could suffer significant damage, resulting in shipment delays due to operational suspension and substantial costs for facility restoration. The Group has diversified its production sites and formulated business continuity plans (BCP), but in the event of a large-scale disaster, this may adversely affect the Group's business results and financial position.

In the Scientific & Metrology Instruments segment, demand fluctuates depending on research and development budgets of government agencies in each country and capital expenditure trends of private companies, while the Industrial Equipment segment is affected by capital expenditure trends resulting from sharp fluctuations in market conditions. Note that the Medical Equipment business was transferred to Sysmex Corporation effective April 1, 2026, changing the business portfolio. Fluctuations in demand in these segments may affect the Group's business results and financial position.

Goodwill and intangible assets have been recorded in connection with the consolidation of JEOL KOREA LTD. and Japan Superconductor Technology, Inc. as subsidiaries. If economic conditions deteriorate or business performance does not progress as expected, profitability may decline, and the recording of an impairment loss on goodwill may affect the Group's business results and financial position.

Because product acceptance inspections tend to be concentrated at the fiscal year-end (March) for government agencies and private companies, net sales in the fourth quarter tend to be higher than in other quarters. Delays in product acceptance work may cause the timing of sales recognition to be pushed into the following fiscal year, which may adversely affect the Group's business results and financial position. The Group formulates plans that take seasonal fluctuations into account and strives to maintain and expand sales during this period, but complete avoidance is difficult.

There is a risk that rapid changes in market trends, technological innovation, and product life cycles may necessitate the disposal of inventories and the recording of valuation losses. The Group pays close attention to the quality and environmental standards of products and parts as well as inventory management, but if a sudden market change occurs, it may adversely affect the Group's business results and financial position.