GMB CORPORATION

GMB Korea supplies automotive parts such as Valve Spool and Electric Water Pumps to the Hyundai Motor Group on an OEM basis, and the sales ratio to consolidated net sales for FY2026 (ending March 2026) reaches 38.3%. Due to the high dependence on a specific customer, changes in the Hyundai Motor Group's business trends and overseas expansion directly affect the Group's business performance. The Group is working to diversify risk while responding to the increase in overseas investment projects accompanying Hyundai Motor's overseas expansion.

In the U.S. market, low-price competition from Chinese-made automotive parts is intensifying, and oligopolization by large-scale suppliers is progressing. The Group has relocated production bases to China and Thailand to pursue the optimal balance between quality and price, but there are concerns about the impact on business performance as the competitive situation develops. There is also a risk of increased returns due to DIY practices, and the volume of returns may increase as transactions with major retailers expand.

For FY2026 (ending March 2026), the ratio of overseas sales to consolidated net sales is 90.9%, and the ratio of sales from direct exports by the Company alone is 51.4%, both high levels, resulting in a business structure susceptible to foreign exchange fluctuations. As countermeasures, the Group is improving the balance of transaction currencies, increasing yen-denominated transactions, expanding overseas procurement, relocating production overseas, and using forward exchange contracts, but sudden exchange rate fluctuations may still affect business performance.

The Group has established a quality assurance system, but there is no guarantee that all products are free of defects or that recalls or product liability claims will not occur. In the event of a large-scale recall or product liability claim, the Group's business performance could be significantly affected by substantial cost burdens and deterioration of social reputation. Although the Group hedges certain risks through insurance, there is no guarantee that the final compensation amount will be sufficiently covered.

If natural disasters, wars, terrorism, infectious diseases, or similar events occur at the Group's or major business partners' locations, there is a risk that production, procurement, and sales activities will be stagnated or interrupted. The Russian consolidated subsidiary suspended factory operations due to the military invasion of Ukraine in February 2022 and resumed limited operations from 2024, but the impact on business performance may continue due to the expansion of combat areas, prolongation of the conflict, economic sanctions, and other factors. The Group is working to reduce risk through measures such as developing business continuity plans, but complete avoidance is considered difficult.

If core systems or communication systems are disabled due to cyberattacks or similar incidents, business activities such as production, sales, and financial accounting may be interrupted, potentially making it impossible to supply products to customers. If important information such as business partner information or technical information is leaked, business performance may be affected due to the occurrence of liability for damages and a decline in reliability. As countermeasures, the Group has introduced antivirus software, strengthened network security, introduced behavior detection products and backup systems, and conducted employee training.

The Group operates four subsidiaries in China, but there is a risk that the business environment will change due to policy changes such as rising production costs from increasing labor costs, revisions to preferential tax systems for foreign-invested companies, and stricter environmental regulations. While sudden environmental changes may affect the Group's business development and performance, the Group aims to expand its business and strengthen price competitiveness by continuing to efficiently operate its Chinese subsidiaries and develop new sales and procurement channels.

The Group has production bases in South Korea, China, Thailand, Europe, the United States, and India, but if sufficient technical support cannot be provided or capable engineers cannot be secured, business plans may be affected. There is also a risk of production delays or delivery delays due to unforeseen circumstances such as machine breakdowns, which the Group addresses by strengthening support and guidance to overseas subsidiaries. In addition, from the perspective of cost competitiveness, the Group is also promoting procurement from outside the Group, and the progress in developing overseas procurement sources that can maintain quality standards affects business performance.

GMB Korea is listed on the Korea Exchange, and the Company's equity ratio is 54.4%. Changes in South Korea's laws, regulations, and practices may affect the Group's business plans, and the Group is also required to respond to the increase in overseas investment projects accompanying the expansion of the Hyundai Motor Group's overseas operations.

The Group registers trademark rights and manages intellectual property rights in 51 countries or regions, but counterfeit GMB-branded automotive parts are circulating in Asian regions and elsewhere. The circulation of counterfeit products may adversely affect the Group's brand value, sales, and reliability, and the Group is addressing this through the active enforcement of trademark rights protection.