YUTAKA GIKEN CO.,LTD.

The Group operates in Japan, North America, South America, China, Asia, and other regions, and its business performance may be affected by a decline in demand for four-wheel and two-wheel vehicles due to economic downturns or changes in consumer values, as well as a decrease in internal combustion engine vehicles due to the rise of electric vehicles. In addition, since a large portion of sales depends on the Honda Motor Co., Ltd. group, changes in that group's sales conditions could significantly affect the Group's business performance and financial condition. As a countermeasure, the Group strives to appropriately grasp changes in the market environment and mitigate risk through customer expansion.

The Group conducts its main business in cooperation with various companies of its major customer, the Honda Motor Co., Ltd. group, and changes in that group's production systems, etc. could significantly affect the Group's business, business performance, and financial condition. The structure in which a large portion of sales depends on that group could become a serious vulnerability to business continuity as a customer concentration risk. As a countermeasure, the Group strives to appropriately grasp changes in production systems, etc., and mitigate risk through customer expansion.

The Group conducts production and sales activities in countries and regions around the world, and exports and imports parts between bases in multiple countries, so fluctuations in exchange rates affect business performance. In addition to the impact on pricing of parts and products in foreign currency transactions and on raw material procurement costs, translation differences arising from converting the assets and liabilities of overseas subsidiaries into yen may also significantly affect business performance and financial condition. As a countermeasure, the Group strives to mitigate risk through forward exchange contracts and other means.

The Group is exposed to fierce competition with many manufacturers in domestic and overseas markets, and strong pricing pressure could significantly affect business performance and financial condition. Although the Group strives to develop and produce high-value-added products using proprietary technology, there is a risk that maintaining price competitiveness will become difficult due to intensifying competitive conditions. The annual securities report does not describe specific countermeasures.

The Group conducts production and sales activities in countries and regions around the world, and exports and imports parts for four-wheel and two-wheel vehicles, etc. between bases in multiple countries, so fluctuations in tariff rates, new import/export regulations, changes in the scope of regulated items, and similar factors could affect business performance. In particular, heightened geopolitical tensions and the expansion of protectionist policies risk raising supply chain costs and causing logistics disruptions. As a countermeasure, the Group is considering promoting local procurement and reviewing procurement methods.

The Group has production bases in countries and regions around the world, and if changes occur in laws and regulations related to environmental protection, four-wheel vehicles, two-wheel vehicles, factories, production processes, etc., or if differences of opinion arise with authorities, the Group may be subject to investigations, legal proceedings, or similar actions. If an unintended unfavorable determination is made, it could significantly affect business, business performance, and financial condition. As a countermeasure, the Group has established a system to grasp information related to relevant laws, regulations, and litigation in each region.

The products manufactured by the Group are directly connected to human life, and if an unexpected serious quality problem occurs, recall response may become necessary. Such an occurrence could damage the Group's brand image and significantly affect business, business performance, and financial condition. As a countermeasure, the Group has established and operates a quality control system, and also seeks to reduce risk by taking out liability insurance.

The Group uses information and communication systems in the course of its business operations, and system outages, leaks of confidential data, or loss or falsification of important data may occur due to external factors such as natural disasters, terrorism, computer viruses, and hacking, or internal factors such as human error and equipment malfunction. These events could significantly affect business, business performance, and financial condition. As a countermeasure, the Group is working to strengthen security, back up data, migrate systems to the cloud, and conduct internal evaluations.

Since the Group operates in countries and regions around the world, if war, terrorism, political instability, strikes, large-scale natural disasters, accidents, infectious diseases, or similar events occur, delays or suspensions may occur in the purchase of raw materials and parts, production activities, and logistics. These events could significantly affect business, business performance, and financial condition. As a countermeasure, the Group prioritizes ensuring the safety of employees, and strives to mitigate risk by gathering information for each region and establishing systems appropriate to the circumstances.

The Group purchases raw materials and parts from many external business operators, but some supplies depend on specific business operators. If, for some reason, the Group is unable to receive a stable, efficient, and competitively priced supply, this could significantly affect business, business performance, and financial condition. As a countermeasure, the Group strives to mitigate risk by establishing its procurement systems.