ShinMaywa Industries, Ltd.

If business sites or production facilities are damaged by natural disasters such as earthquakes or storm/flood damage, business activities may be interrupted and recovery costs may increase, which could have a material impact on the financial position and business results. The Group is working on the development and review of BCPs based on the basic BCM policy, establishment of a safety confirmation system, disaster prevention/mitigation measures, and supply chain risk management, among other initiatives.

Since production and service activities depend on employees and important machinery and equipment at each site, if a serious industrial accident or fire/explosion accident occurs, business activities may be interrupted, recovery costs may increase, and penalties for delivery delays may arise, which could have a material impact on the financial position and business results. The Group strives to prevent accidents through risk assessments to identify hazardous locations, safety patrols and audits, experiential training, and equipment inspections based on laws and regulations.

If important systems are shut down or data is lost due to a cyberattack, business activities may be interrupted and recovery costs may increase; if confidential information or personal information is leaked, this could lead to a loss of competitive advantage and damage to social credibility, which could have a material impact on the financial position and business results. The Group strives to improve its defense and response capabilities through enhanced monitoring, employee education and training, and the establishment of a CSIRT structure.

If acts in violation of the Antimonopoly Act or other laws and regulations occur, this could result in the loss of licenses and permits, business suspension orders, and loss of business opportunities due to disqualification from public tenders, in addition to economic losses such as fines, penalties, and damages, as well as damage to social credibility, which could have a material impact on the financial position and business results. The Group strives to strengthen its compliance structure through continuous compliance education, audits of legal compliance status, and appropriate operation of the internal whistleblowing system.

If quality problems such as defective or faulty products occur, this could result in increased recall costs, damage claims, and damage to social credibility, which could have a material impact on the financial position and business results. The Group is working on the operation and improvement of its QMS, ensuring quality from the design stage through FMEA, the introduction of automatic inspection machines, thorough implementation of measures to prevent recurrence of nonconforming products, and the establishment of an emergency response structure.

If the prolonged surge in raw material procurement prices due to rising resource prices such as crude oil and steel, as well as increased transportation costs, continues over the long term, this could result in an increase in manufacturing costs and loss of sales opportunities due to delivery delays to customers, which could have a material impact on the financial position and business results. The Group strives for stable procurement through joint cost reduction efforts with partner companies, securing appropriate inventory levels, and switching to alternative materials through design changes.

If sudden changes in the political and economic situation at overseas sites, lockdowns due to the spread of infectious diseases, terrorism, or similar events occur, business activities may be interrupted, which could have a material impact on the financial position and business results. The Group strives to collect and share hazard information at overseas sites during normal times, and also raises employee awareness regarding responses in the event of country risk occurrences.

If efforts related to greenhouse gas reduction do not proceed as planned, or if the Group is unable to respond appropriately to regulatory changes, this could affect business results due to increased costs or the discontinuation of transactions with major customers. The Group has set KPIs related to greenhouse gas reduction and waste reduction, and is working to promote related measures.